French company Naval Group says its $ 830 million compensation deal for the future abandoned submarine program is “fair and equitable” as the debate continues over whether Australia has paid too much.
Key points:
- Anthony Albanese announced a $ 830 million deal on Saturday
- The figure has been questioned by the opposition, which caused the payment by discarding the agreement while in government.
- A former defense official and now a military analyst says the figure seems “reasonable”
On Saturday, Prime Minister Anthony Albanese announced the grand financial deal, nine months after his predecessor Scott Morrison dumped the $ 90 billion project in favor of the AUKUS nuclear association.
“It raises the total cost of the former government’s failed policy to $ 3.4 billion,” Albanese told reporters, referring to the approximately $ 2.5 billion already spent on the program.
The Prime Minister described the $ 830 million settlement as “fair and equitable” and thanked President Emmanual Macron for “the discussions and the cordial manner in which we are re-establishing a better relationship between Australia and France”.
In a statement, Naval Group, which is majority owned by the French government, echoed the statements of Mr. Albanese and thanked those who had worked on the now abandoned project.
“The Naval Group and the Commonwealth of Australia have reached a fair and equitable agreement to bring a conclusion to the Submarine Program of the Future.”
“Naval Group pays tribute to all the people, teams and partners who have worked and conducted this program for over five years,” the company added.
Three years ago, the ABC revealed the secret “rupture payments” contained in the confidential “Strategic Partnership Agreement” (SPA) between Australia and France should the lucrative submarine program be scrapped.
According to leaked figures, Naval Group would receive an exit fee of 90 million euros (about $ 135 million) if the company completed the basic design, but the Department of Defense decided not to continue further (the stage in which the Morrison’s government switched to AUKUS). ).
The ABC was told that the SPA between Australia and France did not include provisions specifying additional compensation beyond the detailed “severance payments”.
Shadow Defense Minister Andrew Hastie has questioned the Albanian government’s high compensation, alleging that Morrison’s government had been “aspiring to a significantly lower figure” before losing office.
“He (Mr Albanese) has to explain to Australian taxpayers how he came up with that figure,” Hastie said.
Independent Senator Rex Patrick, a former diver, also believed the French company had achieved too generous final compensation.
“I think there will be champagne corks in Cherbourg this weekend,” Senator Patrick said, referring to the French shipbuilding city where Naval Group is headquartered, “Senator Patrick told ABC. .
Outgoing independent senator Rex Patrick said the compensation figure was too generous. (AAP: Lukas Coch)
“$ 835 million is a lot of money to compensate a company for not having to deliver anything.”
Former Defense Department official and senior military analyst Andrew Davies said the $ 830 million compensation figure seemed “reasonable enough at first glance.”
Dr Davies said it was likely that the final Australian compensation figure would consist of both rest payments (exit fees) and compensation.
“This is not uncommon for a large contract and reflects the opportunity cost to the contractor of the resources attached to the work.
“Naval Group engineers were not generating revenue anywhere else while working for us.
“The other component is likely to be a combination of reimbursement of work expenses incurred so far and preparation for subsequent work.”
The veteran analyst said that while the final compensation figure of $ 830 million seems like a lot, it only accounted for 1-2 percent of the total value of the landfill project.
Meanwhile, smaller Australian defense companies affected by the future submarine program are also seeking support from the federal government.
Brent Clark of the Australian Defense and Industry Network says many smaller local businesses had been economically devastated after the French project was scrapped.
“We would like to see or understand what will happen now for Australian companies that are desperately out of pocket for the cancellation of this project.”