ASC will be separated into three government-owned companies, supporting shipbuilding, submarine sustainment and infrastructure respectively, Minister for Finance Senator Mathias Cormann has announced.
The government does not have a plan to privatise these new businesses, the Finance Minister emphasised, but a deal that would see the federal government taking over the Common User Facility owned by the South Australian government is on the cards.
“The separation of ASC will deliver a more flexible approach to managing the investment required in shipbuilding infrastructure to support the government’s historic continuous shipbuilding program,” Senator Cormann said in a joint statement with Minister for Defence Senator Marise Payne and Minister for Defence Industry Christopher Pyne.
“The new submarine sustainment and shipbuilding companies will continue ASC’s important role in the sustainment of the Collins class submarines and finalisation of the Air Warfare Destroyers respectively.”
The infrastructure company will hold and upgrade shipbuilding and infrastructure assets to support future shipbuilding and submarine programs, while the shipbuilding business will employ the shipbuilding workforce and complete the AWD program, and the submarine sustainment company will employ the submarine sustainment workforce and sustain the Collins submarines.
No decisions have yet been made regarding the build strategy and potential build partners for the Offshore Patrol Vessel and Future Frigate.
“Today, this announcement about the structural separation of ASC is a really important foundational stone in all the next things that will happen for Offshore Patrol Vessels, Future Frigates and the submarine program, so it is a very significant day,” said Minister Pyne.
“What it will do is create at Osborne South the most modern and one of the busiest shipyards in the world; at Osborne North, straight across the carpark, we will establish one of the most modern and busy submarine shipyards in the world.”
Work on the restructuring of ASC will begin immediately, with the separation expected to be completed by the middle of next year.
The federal government will be entering into discussions with the South Australian government regarding the future of the Common User Facility at Techport Australia.
“The intention is that the entire area at Osborne South and North will be owned by the Commonwealth and that will continue to have its ownership of the infrastructure, which is why the Prime Minister said before the election that the assets would remain in public hands,” Pyne said.
“We will be negotiating with the South Australian government to take over their Techport Common User Facility as part of their contribution to the future of the naval shipbuilding industry in South Australia, and so that infrastructure will be part of that business.”
The creation of the companies follows a strategic review that was conducted in 2015. This review was undertaken by the Department of Finance in consultation with Defence; following a competitive procurement process, Deloitte Touche Tohmatsu was appointed as the business and accounting adviser, and Herbert Smith Freehills as the legal adviser.