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France-Australia submarine program: Small businesses lost $200k when government scrapped French deal for AUKUS

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Hundreds of small Aussie businesses have suffered a massive blow in government deals. Hundreds of small Aussie businesses have suffered an enormous impact from the government’s shock cancellation of the French-Australian submarine deal. Australian Industry Defence Network Chief Brent Clark told a Senate inquiry that small businesses spent an average of $200,000 each upgrading their capabilities for the now-canceled military submarine project. “Our members are indicating somewhere around 200,000 in losses. Maybe even a little bit more,” Mr. Clark said. “Many Australian companies invested in becoming part of the attack submarine supply chain. This investment was encouraged by the government.

“The businesses’ investment was based on the reasonable assumption that this program would run for decades.” In September, Prime Minister Scott Morrison announced that Australia would scrap its submarine program with the French in place of the AUKUS deal with the US and UK. But at the Senate inquiry on Friday, it was revealed that the government’s plans to shred the French agreement had been months in the making. Australian Nuclear Science and Technology Organisation head Shaun Jenkinson said he was first asked about his organization’s ability to support an endeavor such as AUKUS by the government in early 2021.

“Initial conversations started in March, and we had several consultations between then and the announcement,” Mr. Jenkinson said. But the Australian businesses involved in the original submarine program and the French government were entirely blindsided by Mr. Morrison’s announcement in September. “Many of them were gearing up for years to get into this program, and now that’s gone,” Mr. Clark told the inquiry. The small and medium enterprise communities are businesses that run on very tight margins. They need to know what will be happening today, and they need to know the whole time.”

Despite the losses experienced by local businesses, the federal government has offered no support to help them weather this financial blow. Mr. Clark urged the government to help the companies use the new capabilities they developed for the French program on other projects. “Some are starting to have to let employees go that they hire specifically for this (French submarine program),” he said. “These companies need to be quickly prioritized in the supply chain of other potential programs. For example, the Hunter Class Frigate program.” Mr. Clarke said it was imperative to Australia’s local industry that some of the manufacturing for the new AUKUS program would occur on Australian soil. “The government needs to ensure that this program is not simply an export opportunity for British and American companies,” he said. “It’s not good enough to sit there and say; we don’t need to decide this for five years because that’s when it will happen. These are real companies, and these are real businesses, and they have a real need.”

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