Building new submarines in Japan risks damaging ties with China
17th Oct 2014
Building new submarines in Japan risks damaging ties with China, South Australia's defence industries minister says.
The federal government insists no decision has been made about replacing the navy's six Collins Class subs, which retire in the 2030s, but the main contract appears likely to go to Japan.
Breaking a pre-election promise to build the subs in South Australia could cost thousands of jobs, the state government has warned.
Defence Industries Minister Martin Hamilton-Smith says building the subs in Japan could also antagonise China, the nation's largest trading partner.
"We need to be very sensitive and very careful about our relationship with China before we make decisions about where we will build our submarines," he told reporters on Tuesday.
"It is a relationship that we really value."
Mr Hamilton-Smith was due to speak before a Senate inquiry into the future of Australia's naval shipbuilding industry in Adelaide on Tuesday.
South Australian Labor senator Penny Wong addressed about 100 shipbuilders outside the inquiry, saying the federal government was planning to sell out future generations by moving jobs offshore.
Senator Wong would not be drawn on whether a future Labor government would honour a contract to build the submarines in Japan.
"I'm not even going to countenance that," she told reporters.
"We're doing all we can to make sure that we don't have to look at a decision by this government to build the submarines in Japan."
But Labor Senator Kim Carr said there was no doubt that a contract would be honoured.
"The truth of the matter is that we don't renege on contracts," he told AAP.
"There is always things you can do within a contract. We can always talk to people about changes, depending on how far it is along the project."
An open tender process would be the only way to resolve conflicting claims about the quality and cost of the different build options, Senator Carr said.
Figures released by SA's Economic Development Board this week show the national economy would take a $29 billion hit if the submarines were built overseas.
The inquiry earlier heard that a mission of high ranking Defence officials, including a representative from the prime minister's office, had recently travelled to Japan.