Japan, one of the three bidders for Australia’s $20bn future submarine project, has signalled it is willing to perform construction work in Australia in a development that could ease community concerns about jobs going offshore.
The new industry minister, Christopher Pyne, whose South Australian seat had been under threat over the issue, said he was pleased the bidders were detecting the government’s preference to maximise the construction done in Australia.
The Coalition had been under political pressure in the key manufacturing state over accusations it was preparing to break an election promise to build the submarines domestically.
The German and French bidders had previously expressed an openness to building submarines in Australia, but there had been questions about Japan because of a desire to protect its sensitive technology.
The “competitive evaluation process” set up by the former prime minister, Tony Abbott, requires bidders to submit three options to build at least eight submarines to replace the Collins class fleet. The work would be done in Australia, or overseas, or a mix of the two in a “hybrid” build.
Japan’s ambassador to Australia, Sumio Kusaka, said in a newspaper interview published on Friday that the two countries had “a very good relationship”. He signalled that Japan could work with ASC, the Australian-government-owned shipbuilder.
“We will go along with whatever decision the Australian government makes,” he told the Australian. “It is very important to Japan to be able to design world-class submarines. Not many nations can do that.”
The submarine project is likely to cost the Australian government at least $20bn to build plus an additional $30bn to sustain them once in operation.
Pyne said the Japanese, French and German bidders were required to present various options for construction. “All three of them are now saying they would prefer a domestic build,” he told Nine’s Today program on Friday.
“As a South Australian that is music to my ears, but we will go through the proper processes and announce it at the appropriate time. But it sounds to me like all three bidders are picking up we would like to spend $50bn of defence industry money in Australia where it creates jobs ... It would be great for Australia.”
Abbott had a close working relationship with the Japanese prime minister, Shinzo Abe, and denied claims they had reached a secret deal to give the submarine contract to Japan.
Abbott’s replacement, Malcolm Turnbull, took a congratulatory phone call from Abe after the leadership change last week.
The Coalition’s political pressures in South Australia stem from a pre-election pledge by the former defence minister, David Johnston, that the Coalition was “committed to building 12 new submarines here in Adelaide”.
The issue was raised during internal discussions before Abbott faced the failed leadership spill motion in February. Abbott promised the “competitive evaluation process” to shore up support from South Australian MPs to help defeat that motion.
Labor’s defence spokesman, Stephen Conroy, who has been pushing for a local build, said the government had been “dragged kicking and screaming” to keep its submarine promise.
“It’s welcome that Japan are now seriously prepared to consider a local build but Labor’s position would take the uncertainty out. We believe the Turnbull-Abbott government should announce that they will only consider the domestic build component of the tender,” he said.
Conroy said an offshore build would break the Coalition’s election promise. He said the hybrid option – which combined domestic and offshore construction – was ill-defined and should also be ruled out.
Japan’s chief cabinet secretary, Yoshihide Suga, confirmed in May that the security council had decided Japanese firms should join the competitive evaluation process “in light of the importance of defence cooperation between Japan and Australia”.
The decision came after Japan’s revised rules on the transfer of arms and defence technology, Suga said.
