(Image: Tom Red/Private Media)

The prime minister enjoys, when needs must, cracking the whip. He did it with errant backbencher Craig Kelly and not long after the member for Hughes was sitting on the crossbench. Now his whip-cracking has extended to the troubled Attack class submarine fleet, with reports suggesting Scott Morrison has moved to smarten up the French-owned contractor, the Naval Group.

Amid claims of cost and schedule overruns and disputes over the amount of local content in supply lines, it emerged yesterday that Morrison will bring the naval building project under the control of a cabinet subcommittee, reportedly out of concern that the mega-project — last forecast to cost $90 billion to supply 12 submarines — might run off the rails.

Or, in government-ese: “The committee will ensure the naval shipbuilding enterprise and each component of it is on track to deliver against Commonwealth-agreed outcomes, and emergent or forecast risks are identified that may impact or prevent achieving delivery of milestones.”

The move caps a messy two months of claim and counterclaim over progress and principally the Naval Group’s undertaking to deliver on 60% local content. (An agreement was close to being signed on that yesterday.)

The government has been portraying itself as being tough on the French — a smart customer that won’t be taken for a ride. No sir.

Covering the government’s backside

But the government has been playing with fire of its own. Since the contract was signed in 2016, there have been three defence ministers. The third and current one, Linda Reynolds, has been on leave since February 24, the day she was due to meet Naval Group’s visiting chief executive Pierre Eric Pommellet.

A threat to cancel the contract has been floated in the business media but is not a serious option, says Dr Marcus Hellyer, an expert in defence economics with the Australian Strategic Policy Institute.

The reasons, Hellyer tells Inq, were that breaking the contract would cause a diplomatic breach with France. The government had invested five years and close to $1.5 billion in the project and there was no viable plan B. And there is the potential for hundreds of millions of dollars in break fees.

As well as promoting the idea of itself as being in control, the government has done what it does best when problems arise: put a clamp on public information.

The national interest means saying nothing

The information blackout reached a high point — or low point — in early February when the Defence Department refused point blank to answer questions at the Senate economic references committee on the grounds “it was not in the public or national interest” to answer detailed questions on project costs.

The refusal by the department’s senior officials, it emerged, was backed by the government. It drew an extraordinary rebuke from committee chair, Senator Alex Gallacher, a Labor senator from South Australia, home to the construction of the submarines.

“The department’s performance, when we have requested information, has been nothing short of abysmal,” Gallacher began. “You have redacted publicly available information and sent it to us. It’s almost like you have a giant forefinger up to the operation of this committee.

“It has now been to the Senate to get orders. I accept that you have a case on your commercial confidentiality position and all the rest of it, but in the ordinary course of this committee’s activity I, as the chair, personally feel — and I’m sure there are other members of the committee who feel the same way — that Defence has been absolutely obtuse, arrogant, dismissive and contemptuous of the work of a Senate committee duly given a reference by the Senate.”

Rex Patrick, another South Australian senator who has been a long-term critic of the submarine project, weighed in.

“Could I put on the record, just so that everyone listening understands: we’re talking about documents that the committee has asked for and agreed to receive in confidence,” he said. “The committee is not asking for information that you might consider sensitive to be placed on the public record. That’s the context in which everyone should answer questions here.”

It was left to defence bureaucrat Tony Dalton, the official in charge of the national naval shipbuilding, to offer an excuse: “We are public officials. We work for the government of the day, through our minister, and our minister’s view is it’s not in the public interest.”

Political games notwithstanding, the spectacle of defence bureaucrats giving parliamentarians the finger was unprecedented, Hellyer says.

“Defence’s relationship with the Senate is at an all-time low,” he said, “And disclosure on big defence projects is also at an all-time low.”

Late last week as the government upped the ante on the Naval Group. Inq asked Defence to explain what was going on and specifically if there were serious moves to find a new contractor. We got no more than a standard reply:

This government remains steadfastly committed to building a regionally superior future submarine capability in South Australia, with the backing of a strong sovereign defence industry. The future submarine program continues to progress, with the entry into systems functional review in January 2021. Defence continues to work closely with Naval Group to progress this project to ensure it is delivered on-time, on-spec, and on-budget.”

Sacre bleu.

A real crisis? Or a confected one?

There is much to lose for both the government and the Naval Group should the Attack class future submarine project go down — which perhaps guarantees that it won’t.

Over the past 12 months — and coming soon after a damaging assessment by the Australian National Audit Office — the company has moved to Australianise its most senior ranks.

At the beginning of the year Naval Group appointed Grahame Peever as chairman. Peever is an ex-Rio Tinto head and in 2014 was chair of the federal government’s first principles review panel into defence.

At the same time it added two more defence industry heavyweights to its board. One, Kim Gillis, is a former head of the Capability Acquisition and Sustainment Group, the powerful Defence Department grouping responsible for major projects.

The board already included Ken Gillespie, a former head of army and rolled-gold defence royalty.

The company also reportedly appointed Liberal-linked lobbying firm, Dragoman, to improve its political standing. Dragoman’s senior counsel is former defence minister Robert Hill, also a South Australian. (Naval Group has not yet responded to Inq’s request to confirm or deny this.)

Another recently departed Naval Group director is Paul O’Sullivan, whose long career included stints as a diplomat and director-general of ASIO as well as two long bouts as a political staffer, first as chief of staff to attorney-general George Brandis and before that as a senior adviser in the office of prime minister John Howard.

And that’s not even taking into account the politically connected board members of the Thales Australia group, which via its French corporate relationship is a one-third owner of the Naval Group.

So the government has the comfort of knowing that the Naval Group not only speaks Australian but is fluent in defence and Australian politics as well.

The taxpayer-funded ecosystem

How much does it cost the Australian taxpayer to support the political influence-peddling and board level schmoozing to keep the project afloat? That we can’t tell you. We searched its ASIC filing and came up empty handed. The Naval Group is a private company and is not obliged to publish how much it pays its directors.

Is it working? As of early this week the company had advertisements out for at least 30 staff. Engineers were invited to apply with the promise of seven months on-the-job training in France. So the political imperative of South Australian jobs is looking like it will be met.

Think of it as a two-for-one deal for the Australian taxpayer: securing Liberal seats in Adelaide while providing high level consultancy and director fees. Oh, and a world class submarine fleet some time.