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'Champagne corks popping' after Australia's $830 million French submarine compensation payment - ABC News

French company Naval Group says its $830 million compensation deal for the scrapped future submarine program is "fair and equitable", as debate continues over whether Australia has paid too much.

On Saturday, Prime Minister Anthony Albanese announced the large financial settlement, nine months after his predecessor Scott Morrison dumped the $90 billion project in favour of the AUKUS nuclear powered partnership. 

"It brings the total cost of the former government's failed policy to $3.4 billion," Mr Albanese told reporters, referencing the approximately $2.5 billion already spent on the dumped program.

The Prime Minister described the $830 million settlement figure as "fair and equitable" and thanked President Emmanual Macron for "discussions and the cordial way 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 Mr Albanese's remarks and thanked those who had worked on the now abandoned project.

"Naval Group pays tribute to all individuals, teams, and its partners who have worked and delivered on this program for more than five years," the company added.

Three years ago, the ABC revealed the secret "break payments" contained in the confidential "Strategic Partnering Agreement" (SPA) agreed between Australia and France in the event the lucrative submarine program was ever scrapped. 

According to the leaked figures, Naval Group would receive a 90 million euro (about $135 million) exit fee if the company completed the basic design, but the Defence Department then decided not to proceed further (the stage at which the Morrison government switched to AUKUS).

The ABC has been told the SPA between Australia and France did not contain provisions specifying additional compensation beyond the detailed "break payments".

Shadow Defence Minister Andrew Hastie has questioned the Albanese government's high compensation settlement, claiming the Morrison government had been "aiming for a significantly lower figure" before it lost office.

"He (Mr Albanese) needs to explain to the Australian taxpayers how he got to that figure," Mr Hastie said.

Independent Senator Rex Patrick, a former submariner, also believed the French company had secured a far-too-generous final compensation figure.

"I think there will be champagne corks popping in Cherbourg this weekend," Senator Patrick said, referring to the French shipbuilding town where Naval Group is based," Senator Patrick told the ABC. 

A close up shot of Rex Patrick speaking. He is wearing a suit.
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 them not having to deliver anything."

Speaking from the Shangri-La defence dialogue in Singapore, Defence Minister Richard Marles defended the size of the settlement and said the Coalition's claim that it was aiming to secure a lower sum when it was in government is "not true".

"They're really making stuff up in terms of where their government was at just a few weeks ago," Mr Marles told Sky News on Sunday.

"It's really important in terms of putting a line underneath what has been a very difficult relationship between France and Australia under the previous government and return that relationship to the way it should be given we are neighbours [with French territories in the Pacific]."

Former defence department official and leading military analyst Andrew Davies said the $830 million compensation figure seemed "reasonable enough at first look".

Dr Davies said it was likely the final Australian compensation figure was comprised of both break payments (exit fees) and compensation.

"That's not unusual for a big contract and reflects the opportunity cost to the contractor of the resources tied up in the work.

"The other component is likely to be a combination of reimbursement for expenses incurred in the work to date and preparation for follow-on work."

The veteran analyst said while the final compensation figure of $830 million seems like a lot, it represented only 1-2 per cent of the total value of the dumped project.

Meanwhile, smaller Australian defence companies affected by the dumping of the future submarine program are also seeking support from the federal government.

Brent Clark from the Australian Industry and Defence Network says many smaller local companies had been financially devastated after the scrapping of the French project.

"We would like to see or understand what is now going to happen for the Australian companies that are desperately out of pocket over the cancellation of this project."

Posted , updated 

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2022-06-11 19:21:58Z
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