Defence Minister David Johnston's criticism of ASC.

When discussing the performance of ASC in constructing Air Warfare Destroyers and maintaining Collins Class submarines, the Minister gave way yesterday to the frustration that many people feel and departed for 5 seconds from normal, staid, uncontroversial language.

26th Nov 2014



Defence Minister David Johnston's criticism of ASC.


When discussing the performance of ASC in constructing Air Warfare Destroyers and maintaining Collins Class submarines, the Minister gave way yesterday to the frustration that many people feel and departed for 5 seconds from normal, staid, uncontroversial language. His reference to ASC as not being competent has been pounced on by the Labor Opposition – and sections of the media – and used as a reason to call for the Minister's resignation. The Minister was making a valid and completely justified point that the management performance of ASC – under Government ownership since the year 2000 – has been disappointing. He might have wished to add that it is the performance of the Air Warfare Destroyer Alliance – of which ASC is a member and has the lead for ship assembly – that is also a major part of the problem.

Criticism of David Johnston is misplaced. As we have noted before, in a bizarre move it is the Minister for Finance, as the legal owner of ASC, who has been put in charge of the AWD get well program – and despite Prime Minister Abbott claiming today that things are now getting back on track there is absolutely no evidence that this is the case. On the contrary, with each passing day it seems that the AWD Alliance is continuing to operate in a business as usual fashion and so is presumably continuing to haemorrhage taxpayer's money. The involvement of the Minister of Finance and the Prime Minister also saw the appointment of Sophie Mirabella, the Liberal ex-member for Indi – a well known expert in naval construction and program management – to the board of ASC just two months after losing her seat in complete defiance of a national swing to the Coalition.

We have written consistently that the most important step required to get the AWD program back on track and to reduce the debilitating costs of the Collins Class fleet is to privatise ASC as a matter of urgency. The Government has successfully sold Medibank Private and it looks like the Defence Housing Authority will go the same way. In the national interest, ASC should actually have been the first of these Government entities to be put on the market.

In the mid-1980s Federal Labor faced a similar problem with the Government-owned Williamstown Naval Dockyard in Melbourne incapable of building two FFGs. Similar to the AWD situation, the initial response was just to throw more money at the problem in the hope that it would go away. However, with a reformist Ministry in place there was a collective view in the Hawke-Keating Government that the best solution in the national interest was to sell the dockyard – and with it the contract to complete the FFGs. This process, initiated by the very young Defence Minister of the day Kim Beazley – another West Australian - led to a temporary hiatus, but the program was in such profound difficulty that this was a very small price to pay for sorting out a very large mess. The companies involved in the privatisation: Eglo; ICAL; then Transfield; then AMECON, not only went on to quickly launch the FFGs but then won the contract for the construction of 10 ANZAC Frigates – which is still the high water mark for the efficient, timely and high quality build of naval surface combatants in Australia. A similar formula needs to be followed for fixing the AWD program – and setting the country up for the future local construction of submarines.

Defence Minister David Johnston should not only continue in his portfolio, he should be given full control of the AWD program and allowed to sort it out. He cannot be blamed for circumstances that are not of his making.

And a final reminder to the Labor Opposition: there were warning signs as early as 2009 that the AWD program was already in serious risk of going off the rails. Successive Ministers chose to completely ignore those warnings, which with the passage of time only became more strident. There is plenty of blame to go around for this ongoing mess – and one of those who is least culpable is David Johnston.

 

APDR at a glance