Building submarines overseas would cost us $20b: report

Australia stands to lose $20b in GDP if the next generation of submarines are built overseas, according to the South Australian Economic Development Board (EDB).

The report, released before tomorrow’s Senate inquiry into naval shipbuilding in Adelaide, considers all costs of building the submarines in Australia or overseas.

It takes into account the cost of foregoing other government spending to fund the submarines, so that current public sector deficit targets stay the same. It also accounts for the fact that building the vessels locally would not fully compensate for the benefits to the Australian economy since some components and expertise would be sourced from overseas.

Apart from the $20b which would be added to the GDP, the reports found that by keeping the construction in Australia 3,000 jobs would be saved for every year of the 40 year project.

EDB Chairman Raymond Spencer said in a statement, “Initial indications are that importing Australia’s next generation submarines would be an economic mistake.”

“Not just for South Australiabut for Australia as a whole.”

"We were concerned that decisions were getting made without an adequate analysis of the broad-based impact on the national and the state economy," he told the ABC.

"We felt that we had to look at it over the long term rather than simply look at it."

The Federal Government will make an official decision about the submarines in the defence strategic policy document set for release in 2015.

Nevertheless there has been significant speculation that they may be built in Japan.