The AUKUS subs: a sunk deal for Australian workers

Osborne is a suburb in Adelaide’s north, sandwiched between the Port River and the Gulf. It has one major industry – shipbuilding – at the Australian Submarine Corporation (ASC).

At its peak, when producing the Collins-class submarines, under the memorably-named Hans Ohff, it employed around 2,000, mostly highly-skilled, workers. Many skilled tradespeople, technicians and engineers got their start there; it was a strong union shop as well.

The announcement of the new submarine project gave the workers at Osborne and ASC a new lease on life. Economic shock hit Adelaide’s northern suburbs when the car industry closed. First Mitsubishi in the late-1990s, and then most drastically, General Motors-Holden, closed after the policy effects of the federal government’s “lifters versus leaners” rhetoric denied any financial support to a car industry still reeling from the GFC. The Elizabeth area where Holden was located registered 30% unemployment after Holden closed in 2017.

During his brief time as Prime Minister, Tony Abbott tried to convince the Australian defence establishment that purchasing the Japanese Soryu-class submarine “off-the-shelf” was a smart strategic decision. This decision was condemned by that same defence establishment – but just as importantly by the workers and the communities of which they were a part.

The Abbott government tried to tough out its decision. My union, the Australian Manufacturing Workers Union (AMWU), decided to campaign on an Australian-built alternative. That campaign was strong, brief and effective; with his comment that Australian shipyard "couldn't build a canoe", then-Defence Minister, former Senator David Johnston, not only engineered his own demise, he also ushered in a cabinet reshuffle and the potential for a fresh start.

What followed was a process of campaigning, lobbying and negotiating. In a rare departure for the Coalition government, unions were able to take part in the negotiation of the terms of the industry participation plans. Johnston’s replacement, Marise Payne, was no match for the advocacy and agitation led by the AMWU, assisted by Labor Senators and independent Senator Nick Xenophon. Fearing for Liberal-held seats in the Adelaide hinterland, Adelaide-based Liberal MP Christopher Pyne was appointed to a new role as “Defence Industry Minister.”

When the dust settled, a decision was taken to build and purchase a locally-built version of the French Shortfin Barracuda-class submarine. With partnering between the French Naval Group, BAe Systems, and many other local companies, work commenced on tooling up for production, mainly at Osborne. One of the impediments to a speedy commencement was the need to convert the Barracuda from a nuclear to a conventionally powered design.

While joy wasn’t exactly unbounded – the Osborne site still had to get through the “Valley of Death”, so-called because of the loss of existing work and ramping down of the skilled workforce while awaiting the new work to commence – there was a quiet confidence, on the part of workers, the community, and South Australian politicians (regardless of political affiliation), that SA had turned a corner. Perhaps the legacy of policy failure experienced by the vehicle industry (which closed in SA as a result of the denial of Commonwealth support for Holden, a requested soft loan of less than $1bn) could be partly repaired with this decision.

Much of South Australian industry was already reorienting towards this outcome:

  • a Naval Shipbuilding College was commenced with over $100 million of Commonwealth funds to be invested
  • Naval Group, the winning bidder, opened a major headquarters for the Asia Pacific in Adelaide;
  • the innovation precinct at the former Mitsubishi site at Tonsley was developing the technologies behind the “Digital Shipyard”;
  • Many smaller and medium enterprises were starting the process of seeking accreditation to enable them to tender for Defence work.

At the same time, there was of course significant dialogue between the Australian and French Governments and Naval Group as well as BAe Systems, also a major naval ship builder. An interchange program was commenced with skilled personnel to transfer and develop new skills, while contract negotiations were continuing. Uniquely for this government, there was even constructive dialogue with unions. The AMWU was jointly developing a skills strategy with BAe Systems and Naval Group and local TAFEs and training providers.

A critical element of this whole strategy was the choice to obtain a conventionally-powered submarine. The other major design contender, from TKMS in Germany, was diesel-electric and would not have required re-engineering to meet the design brief. However, Naval Group made its bid knowing it would need to amortise the cost of the re-engineering across the 12 boats. According to reports, that process had been completed.

Part of the problem in Australia has been the continued attack on skills funding under the federal government. Their preference for private training academies and neglect of the public training provider (TAFE) has led to a reduction in total VET funding of more than $3bn annually. TAFE is the only VET provider with the ability to undertake technologically-sophisticated training with up to date digital equipment. The end result of ignoring the need for skilled workers is a sustained decline in apprenticeships (now down by 140,000 per year).

That skills crisis was exacerbated by the closure of the vehicle industry. The vehicle industry was a key employer and trainer of skilled workers, a major technological innovator, and a major employer in sheer numerical terms. And vehicle industry workers were the backbone of many communities as leaders, workers and influence builders. With the industry’s closure in 2016, the support for all these aspects of a modern industrial economy was likewise closed off. The submarine program offered prospects for reversing that multi-dimensional trajectory of deindustrialisation.

The submarine project also developed a new strategic view of Australia’s navy. The Royal Australian Navy has been the poor relation of defence procurement for many years. The multi-billion dollar procurement deal for the F-35 fighter has continued to flounder, and its costs continue to soar. On 7 September the ABC reported that the whole program was “uncertain owing to design flaws, parts shortages and cost blowouts.” Despite that, there is no question that the replacement program for the F/A-18 will proceed. Likewise, the Army has been successfully re-equipping under its various LAND procurement programs.

Naval shipbuilding had, finally, been given equivalent prominence. The importance of developing and maintaining an Australian fleet in Australian ports and shipyards with accompanying skilled workforces had been recognised. Replacement destroyers, frigates and patrol boats were in development. Much of the byplay was about whether and how much local sustainment would be part of the deal. The AMWU fought for both manufacture and servicing to be undertaken in Australia.

This was an area of major difference with this government. We have been used to a Coalition government telling us that they were the only true defenders of Australian sovereignty. It wasn’t just the nationalistic and jingoistic tendencies of numerous Coalition leaders; according to their rhetoric, it was also the importance of us being independent in a sea of adversity. The blind dash for bilateral and multilateral Free Trade Agreements was, according to these politicians, Australia’s way of securing its place in the world. Markets for our goods, free exchange of people, etc., was the neoliberal mantra.   

Australia had negotiated a bilateral free trade agreement (FTA) with China in 2014-15. China is also part of the Regional Comprehensive Economic Partnership which supposedly committed both Australia and China to more open markets. Australia’s response to China’s more recent aggression has been to align itself closely with the US response and to ramp up its criticism of China -- while at the same time hoping to continue selling Australian commodities in Chinese markets. That contradictory strategy obviously failed: Australian agricultural products and coal sales foundered, although iron ore has continued to be welcomed at Chinese ports.

Instead of using its leverage as supplier of critical resources in negotiations to Australia’s advantage, Australia continued to dither: one moment threatening to “review” exports, another seeking international arbitration, and yet others seeking the assistance of Trump’s White House. The government’s response to China has been contradictory, needlessly belligerent, and has undermined Australia’s ultimate regional interests. The AUKUS program will only exacerbate this failure.

Indeed, amidst these ongoing tensions with China, it is unclear how the AUKUS arrangement will possibly benefit Australia – or the UK, for that matter. Aside from looking like an Anglo-Saxon nations’ alliance, it alienates our closest neighbour and trading partner, New Zealand, which prohibits nuclear ships in its ports. Both Indonesia and Malaysia have registered their opposition. Unsurprisingly, China is enraged, and all for no foreseeable strategic or military advantage. After all, it will be at least 20 years (likely far more) before the first of these US- or UK-built submarines is delivered.

The decision to rescind the contract with Naval Group will terminate all the developments referred to above, and utterly waste the $4.5 billion expended to date. The skills, the jobs, the digital infrastructure, the SME strategy, research and innovation, the status of Australia as a country with which you can do business, the ignoring of sovereign risk, and 25 years of relationship building with France (after the nuclear testing debacles of the 1980s and 1990s): all these are trashed by this sudden lurch in policy.

Compare this to the $1 billion it would have taken to save the vehicle industry. And the $21 billion wasted on corporate welfare during the pandemic response, as many companies increased corporate salaries and bonuses using taxpayer money

Australia’s strategic relationship with the US is not without value. But undue reliance on it has been shown to be wanting. It wasn’t just joining with them in their last 3 losing wars which brought us grief. At the height of the pandemic, Australia sought access to our strategic oil reserve – situated on the west coast of the USA ever since a decision under Prime Minister Turnbull to close our own oil reserve facilities. It appears that the Trump administration couldn’t provide such access in the face of the emergency.

The conservative media has trumpeted the Morrison government’s decision to purchase nuclear submarines from the US or UK as a decision of strategic brilliance. Unusually, the government’s announcement was even applauded by the Chief of the Defence Forces. The CDF has never before made such a statement of support in such an overtly political context. It has been a feature of the Morrison  government that senior serving officers have been placed in coordination roles in civilian matters, for instance in the COVID-19 response. At the same time, many previously civilian roles have been militarized, for example the Customs service has been replaced by Border Force.

Unlike US General Mark Milley, who ensured that the US military was not implicated in the death throes of the Trump administration, the CDF has allowed himself to be used in Morrison’s announcement. Previously, the "diarchy" gave each of the CDF and Secretary of Defense equal status. The Secretary has not been sighted in these announcements. This blurring of the lines between civilian and military authority provides another indication of the desire of Morrison, Dutton, and the Liberal Party leadership to make Australia’s next election a “khaki” one.

In the context of geopolitical conflict with China, it is completely understandable that the Coalition leaders would emulate the original model of the khaki election. When Prime Minister Lloyd George went to the polls in the UK in December 1918 pledging to make a “country fit for heroes,” he was papering over the failed policies of the war years, rampant inflation, the repression of social movements, endemic profiteering and the dislocation of millions of soldiers being hurriedly demobilised with no job to go to. Similarly, the Morrison government has delivered a haphazard pandemic response; economic growth is weak; corruption scandals plague the ministry; it continues to drag its feet in responding to the climate crisis; and jobs and skills continue to decline. The submarines decision is as a rope to a drowning man.

It is therefore hard to see how the workforce at Osborne will be revived after this sudden change in direction on submarines. All of the skills, training, technology, and general knowhow being assembled for the Barracuda project have now been wasted. The Prime Minister has stated that some unspecified share of construction of the nuclear submarines will take place in Australia, in an undefined future. He hopes nobody will remember the industry participation plans and Australian jobs which were supposed to be created by the original program.

Australia has no experience with nuclear fuel cells, and no appetite for developing such technology. Aside from 3 uranium mines and two small research reactors at Lucas Heights in NSW, Australia has refused to be involved in the nuclear fuel cycle. Australians have never agreed with even low-level nuclear waste disposal in this country. A majority of Australians are anti-nuclear. A recent attempt to force a nuclear waste facility onto Aboriginal people in remote regions was defeated.  In an instance like this, the oft-lamented acronym “NIMBY” (Not In My Backyard) has its benefits, if it helps protect us from the perfidy of nuclear waste.

This begs the question: how will we be able to deal with spent nuclear fuel rods? Australia does not have experience or skills in maintaining nuclear propulsion units, meaning that most maintenance will have to be in US territory. How this sits with the supposed “decision” to encourage sustainment here means that this is rather like one of the Howard government’s “non-core” promises from its 1996 election victory: that is, something never to be honoured.

Australia has opposed nuclear power; even the most ardent of fossil fuel advocates is reluctant to propose it as a solution to global warming. Since the Ranger uranium inquiry of the late 1970s and early 1980s, we have imposed strict limits on uranium mining. And Australia has never utilised nuclear energy in a military context (and has regretted cooperating with British nuclear tests in the 1950s ever since).

This decision has destroyed Australian jobs and the skills that go with them, devastated regional economies, damaged any relationship of trust with France for a generation, and introduced an unequivocal commitment to nuclear power when many advanced economies are withdrawing from the field. It reinforces our reliance on an ally which has led us unerringly to military folly for 50 years, escalated tensions with China, and unbalanced our relationships with regional allies like Malaysia and Indonesia. For the government, all this turmoil is justified if it gives the Morrison government an opportunity to be reelected to the drumbeat of a military tattoo. The clincher for me is that the most optimistic assessment sees the first of these submarines being delivered in 20 years’ time.

So much for responding to the immediate threat of China’s expansionary actions.


Andrew Dettmer is National President of the Australian Manufacturing Workers Union, and a former Co-Chair of the Defence Consultative Council.