Plans for Illawarra steel in Australia's future submarines will not be imperilled by delays in the first nuclear submarines to be delivered to Australia, Industry Minister Ed Husic said in Wollongong today.
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In what has been described as a blow to the AUKUS agreement, the US Navy has only budgeted for one attack submarine to be built in US shipyards next year.
The US needs to build 2.3 Virginia-class submarines per year to fulfil the agreement signed almost a year ago between the United States and Australia.
The Biden administration's draft budget funds only one Virginia Class submarine for 2025.
As part of the AUKUS agreement, the US will sell three American-built Virginia Class submarines to Australia before the locally made submarines come into service.
These Australian-flagged, American-made nuclear-powered submarines are expected to enter into service in the early 2030s to fill the gap between the ageing Collins class and the new British-designed AUKUS submarines that will be built in Adelaide.
AUKUS opponent and South Coast Labour Council secretary Arthur Rorris described the Pentagon's decision to cut the number of new submarines being built in the US was a "direct hit" to the tripartite agreement.
"AUKUS was a fantasy from the start, it's moved from fantasy to fiasco," he said.
Since the draft budget was released, there have been reports that the cut in production is a bargaining chip as the Biden Democrat administration attempts to get its budget through Congress and the Republican-dominated House of Representatives.
To achieve the goals of the AUKUS agreement and the eventual construction of Australian-made nuclear-powered submarines, there will need to be significant technology and expertise transfer of closely guarded nuclear naval information between the United States and Australia.
Signed with President Joe Biden, the deal could look different after the upcoming November US election, were Donald Trump to get the keys to the White House again.
"A Trump presidency and Commander in Chief does not go well for Australian sovereignty and the Australian people," Mr Rorris said.
Illawarra steelmakers BlueScope and Bisalloy are the first Australian businesses to be in the running to supply the jointly-developed submarines, which will need to meet strict standards.
Visiting iAccelerate at the University of Wollongong on Wednesday, federal industry minister Ed Husic said budget wranglings in Washington would have little impact on the timeline for local businesses.
"I would not be as concerned as what other reports try to make out," he said.
"All three partners are committed to the pathway that we entered into last March."
Cunningham MP Alison Byrnes - who visited the Connecticut shipyards where the US's submarine fleet is built in January last year - said the Port Kembla steelworks had many other orders to fill, from renewable energy projects to construction materials, aside from future submarine fleets.
"There's plenty of work for our local steel industry," she said.
At the Illawarra-Shoalhaven defence industry conference earlier this month, defence industry minister Pat Conroy said the government was yet to make a decision, or reveal any timeline for a decision.
"We've instituted our own process to identify where an east coast submarine base would be located," Mr Conroy said.
"We think there's a bit more time to decide where the east coast base is."