Australia's naval shipbuilding program on the verge of finding safe harbour in South Australia

The federal government is due to release revised plans for shipbuilding within days. (Supplied)

For decades, much of Australia’s naval shipbuilding efforts and promises have centred on the Osborne yard in Adelaide’s north-west.

From diesel to nuclear powered submarines, frigates, air warfare destroyers and offshore patrol vessels, various programs have been announced, commenced, hit by both time and cost blow outs, or axed all together.

Shipbuilding in South Australia has been a political hot potato through successive governments, with the current Albanese government set to release revised plans for shipbuilding within days.

The state’s defence sector, particularly shipbuilding, has been repeatedly spruiked as an economic boon and a pathway to long term prosperity, particularly in the wake of the demise of the automotive industry.

But will what was promised actually be delivered? Or is another change in course being plotted, especially for the frigate program based at Osborne?

2016: A pivotal year

To understand the current state of play in shipbuilding, rewind to 2016.

A third Defence White Paper in seven years was released by the Commonwealth, which doubled down on the call to build a fleet of 12 conventionally powered submarines and nine future frigates.

It spoke of the need for a continuous shipbuilding program which would not only provide a pipeline of vessels for the Navy but work, and jobs, for decades.

“The continuous onshore build strategy for naval surface vessels my government is delivering will fundamentally transform our naval shipbuilding industry, ensuring its sustainability in the long term,” then-prime minister Malcolm Turnbull said in February 2016.

Decisions were made against the backdrop of a febrile political and economic climate in South Australia, ahead of the double dissolution federal election that July.

It turned out to be the peak of Senator Nick Xenophon’s power and influence in Canberra, with the maverick SA independent branching out to attack lower house seats as well as the Senate.

Maintaining and expanding the state’s submarine and shipbuilding sector was a heavy focus area for the campaign.

At the time, there was concern in Liberal ranks that then Industry, Science and Innovation Minister Christopher Pyne could have been challenged in his traditionally safe electorate of Sturt.

Pre-dating that was internal angst in the Liberal party room over ousted prime minister Tony Abbott’s push to have the submarines built in Japan after the Coalition promised to construct them in Adelaide in 2013.

Another layer was the state of South Australia’s economy broadly, and the manufacturing sector specifically, little more than a year out from the closure of the Holden plant at Elizabeth.

South Australia’s unemployment rate hit 7.7 per cent in February 2016, nearly two per cent above the national average.

This was before the Whyalla steelworks slid into administration, raising the prospect of one of the state’s largest regional centres being plunged into an economic and social abyss.

Then there was what was happening with the workforce at Osborne itself, as the Air Warfare Destroyer build started to wind down, leading to job losses.

No shipbuilding contracts had been inked, creating a so-called “valley of death” for the workforce before any new projects kicked off.

Plus, there was a Labor state government agitating and campaigning, headed by Jay Weatherill and assisted by ex-Liberal state opposition leader turned government cabinet minister, Martin Hamilton-Smith.

These were among the factors that contributed to the decisions in April 2016 when Naval Group was awarded the $50 billion submarine contract, plus the commitment to build nine frigates in Adelaide and a plan to start offshore patrol vessels project in ASC’s yard to fill the “valley of death”.

Two years later British firm BAE Systems was selected as the successful tenderer to build the frigates at Osborne.

Changing times and reviews

Fast forward to 2024 and much has changed, particularly since the AUKUS agreement was struck.

The nuclear submarine deal between Australia, the United Kingdom and United States in 2021 scuttled the French program for conventionally powered boats which were to be built in Adelaide.

AUKUS also helped spark a re-think about the frigate program.

Following the release of the Defence Strategic Review last April, the federal government launched another review of Navy’s surface ship fleet to make sure its “size, structure and composition” complemented nuclear-powered submarines.

“The surface fleet, as it’s currently constructed, was determined at a time when Australia was still pursuing a diesel electric powered submarine,” Defence Minister Richard Marles said at the time.

The Hunter class project has hardly been in calm waters since it commenced.

Its expected budget jumped from $35 billion to $45 billion, the ship’s displacement increased and there have even been calls to scrap the program all together.

The national audit office was called in and found the program was “experiencing an 18-month delay and additional costs due in large part to design immaturity”.

And a report released late last year found the program did not meet the Commonwealth’s rules regarding achieving value for money.

All of which has cast doubt about whether the 2016 pledge of nine frigates will be delivered, or if that many vessels is still needed.

Economically, South Australia is also in a different place to 2016.

It’s ridden through the end of car manufacturing and the COVID-19 pandemic and currently has an unemployment rate of four per cent, the second lowest of any state or territory.

But it’s future plans which have raised some concerns within state government ranks.

What happens next?

ABC News has reported at least six frigates, possibly more, will be re-committed to under the revised plans.

But other options are also understood to have been considered by the Commonwealth.

If the program was cut back to three frigates without an explanation of what would come next, South Australian Premier Peter Malinauskas says that would be “insufficient” to have continuous ship building at Osborne – raising the spectre of another ‘Valley of Death’ for the local workforce.

“So in our view, and we’ve been very clear, that there is no option for the Commonwealth to do anything less than six frigates if they’re serious about a continuous ship build,” he said on Thursday.

“Because six frigates takes us to 2038, 2039 and then allows to announce what follows.”

While visiting a factory adjoining the Osborne yard on Friday, Opposition Leader Peter Dutton said it sounded to him like Mr Malinauskas “had an inside run” on what was coming.

“If Premier Malinauskas is making excuses for Anthony Albanese to reduce the build from nine down to six, then he would have to explain why that is in the best interests of South Australia when clearly it’s not,” he said.

South Australians won’t have to wait long for clarity.