Australia's submarine-building capacity trashed by officials overseas: Xenophon
The reputation of Australian-made submarines has been "trashed" overseas by the Government organisation responsible for securing the country's next fleet, independent senator Nick Xenophon says.
He said officials from the Defence Materiel Organisation (DMO) questioned Australia's capacity to build submarines during high-levels talks with Japanese and European manufacturers late last year.
"Apparently the overseas sub-makers were stunned by the comments made by our own DMO," Senator Xenophon said.
"Any such comments are disgraceful."
Senator Xenophon said the comments were interpreted by the manufacturers that the Government favoured building a fleet of up to 12 submarines overseas, despite having promised prior to the 2013 election to give the contract to Government ship-building company ASC in Adelaide.
He said Prime Minister Tony Abbott needed to "repudiate as a matter of urgency" any suggestion from the DMO that Australia did not have the capacity to build its future submarines.
"There are submarine makers around the world that believe that submarines can be built here in Australia with a good design with a proper process," Senator Xenophon said.
A Defence spokesperson would not confirm whether the comments were made or not, but in a statement said "it was part of the function of the DMO to assess the capability of potential suppliers, both domestic and overseas, to meet our materiel requirements".
The DMO is part of the Department of Defence and employs 5,000 people in Australia and overseas.
It plans to spend $12.5 billion on military equipment in the 2014-15 financial year.
Senator Xenophon said he said was "reliably informed by a source who was in a position to know" about the allegations, and asked the Prime Minister's representative, senator Eric Abetz, in question time if he knew DMO officials were "trashing Australia's industrial capacity".
Senator Abetz said it was "hearsay from an unnamed source" and said he had no advice as to whether the comments were made or not.
He said it was the Prime Minister and the Government's view that any Australian company that could "credibly meet the requirements" for the submarine contract would be considered on merit, as well as potential international partners.
"I am advised that no decision has been made into the number of submarines, types of submarines, or the construction of submarines, and once a decision is ready to be announced, it will be announced," Senator Abetz said.
The allegations followed comments last year by former defence minister David Johnston that the ASC could not be trusted to "build a canoe", which he later backtracked from and claimed was a "rhetorical flourish".
Senator Xenophon said he would back the Opposition in calling for the exclusion of the DMO from all involvement in the future submarine project.
"Too many people in Defence and too many members of Parliament have real concerns about the DMO being part of this procurement process," he said.
The DMO was criticised by Senator Xenophon in July last year after it awarded a foreign company with a contract to make 100,000 pairs of boots for the Australian military rather than awarding the contract to Adelaide-based company Rossi.
