Australia's government-owned shipbuilder says it could construct a new fleet of submarines in South Australia for less than $24 billion, making it competitive with rival overseas bidders.
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Complicating the task of foreign shipbuilders who are pitching for the business, the interim head of Adelaide-based ASC told a Senate estimates hearing on Thursday morning that the firm believed it could build 12 new submarines for between $18 billion and $24 billion. Estimates for the cost of the government's favoured overseas option are between $20 and $30 billion.
The Abbott government has repeatedly implied that it is considering outsourcing overseas the manufacture of a replacement fleet for the ageing Collins Class submarines, despite a pre-election promise by Defence Minister David Johnston to build them in Australia.
This is partly for cost reasons, though Senator Johnston has also said he is concerned that building them locally would take longer and open up a disastrous "capability gap" in which the new boats are not ready by the time the Collins is due to be retired.
ASC's interim CEO Stuart Whiley told the Senate hearing that the firm had calculated a "potential cost range" based on data about the Collins Class and come up with a figure of between $18 billion and $24 billion.
Commonly cited figures have put the cost of building 12 new submarines locally at as much as $40 billion. The government has reportedly calculated a figure of between $50 billion and $80 billion though this appears to include lifetime sustainment costs.
Mr Whiley said he had "no idea" how the figure of up to $80 billion had been calculated.
Finance Minister Mathias Cormann said the latest ASC estimate was "hypothetical" because the government had not yet told ASC what it wants in the new submarines.
"Any such numbers are actually entirely meaningless ... because it is the specifications that are provided that drive the cost outcomes, so to have a discussion around numbers that are quite frankly irrelevant without having the right assumptions underpinning them is not in the public interest."
But Labor swiftly issued a statement saying "this is yet another example of why the Abbott government should keep its promise to build Australia's new submarine fleet in Adelaide".
The Abbott government has been enthusiastically considering a purchase of Japanese submarines based on the nation's Soryu class boats. The Japanese option has been estimated in defence circles at somewhere between $20 billion and $30 billion.
However Germany's TKMS, Sweden's Saab and France's DCNS in partnership with defence giant Thales have also expressed interest in making bids if the government opts for an international tender.
Both TKMS and Saab have reportedly indicated a price tag of about $20 billion.
Thales and DCNS would likely offer a conventional diesel-electric version of DCNS's nuclear-powered Barracuda boat, suggesting a similar cost of about $20 billion.
