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Building submarines overseas would still benefit SA: report

South Australia’s defence industry is in a good position to prosper even if the next generation submarines are not built there, according to a report.

Released today, BankSA’s latest economic bulletin, Trends claims that two-thirds of all the costs associated with outfitting and maintaining the submarines will have to be done in Australia, no matter who wins the contract to build them.

Before the last election the Federal Government pledged that the project would remain in Australia, however there has since been speculation the job will go to an overseas manufacturer. Japan is thought to be the favourite to secure the work.

This has increased speculation that Australia’s ship building industry may not survive. There are fears that a “valley of death” between Government contracts will make it possible for local ship builders to survive. The argument goes that there won’t be enough work between contracts to keep them going.

However according to the Trend report, in a worst case scenario, the valley of death would only result in the loss of 2,000 to 2,500 jobs.

“Yet amid the heated debate, it is easy to forget the complexity of defence spending and its role in the South Australian economy,” says Trends.

“Decisions around the Future Submarines and Future Frigates programs are important for the State, and the ‘Valley of Death’ will present a significant challenge to the local shipbuilding industry, but that isn’t cause for despair.”

"South Australia could still benefit from opportunities in both the build phase and later sustainment activities even if a foreign submarine is selected as the basis for Australia's new submarines."

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