Australia - Labor launches $40 billion submarine project

THE Gillard government has embarked on the nation's biggest-ever capital works project, announcing $214 million in funding for 12 next generation submarines to be built in South Australia.

The money will go towards early-stage design studies to avoid a repeat of the Collins Class debacle, in which just one or two of the nation's six submarines can be put to sea at any one time.

The long-awaited commitment to the $40 billion submarine project came as the government revealed it had found up to $3 billion in defence budget savings from delays in the Joint Strike Fighter project and the axing of plans to purchase new high-tech artillery pieces.

In separate announcements, the government has commissioned a fresh defence white paper to be completed by 2013; and released the final version of a force posture review which focuses more intensely on protecting the nation's northern and western approaches.

Ms Gillard said the government remained committed to the submarine project and it was important to learn lessons from past mistakes with the Collins submarines.

“The early decisions on design questions are the most critical,” she said.

Defence Minister Stephen Smith said the government was being “absolutely methodical and exhaustive” in its planning for the submarine project.

“All of our experience is that 80 per cent of the problems in capability are caused in the first 20 per cent of the life of the project,” he said.

The government is exploring four options: a military off-the-shelf option adapted to Australian standards; a military off-the-shelf option complemented by Australian combat communications and weapons systems; a derivative of the Collins Class submarine; or a brand new design.

Ms Gillard said the funded studies would inform the government's final decision on which option to take.

Less than a week before the budget, Mr Smith said the government had made savings through delays in the United States Joint Strike Fighter program, returning $1.5bn to $2.6bn to the budget over the forward estimates.

The government has also opted against purchasing up to six self-propelled artillery pieces, at a saving of $225 million.

Ms Gillard said: “Defence will be making an important contribution to the government's fiscal objectives.”

She said the savings would not compromise overseas operations, equipment for serving troops, essential projects or defence numbers.

The next defence white paper will be delivered a year ahead of schedule, Mr Smith said, taking into account further strategic shifts in Australia's region and the updated timetable on Australia's withdrawal from Afghanistan.