in line for a 2 billion $ contract

SOUTH AUSTRALIA and Western Australia joined forces yesterday in the race for $8 billion in navy shipbuilding contracts to be awarded in the next two years.







Under the Australia-first deal, Perth will not compete against Adelaide in its bid to secure the $6 billion contract for the navy's three air warfare destroyers.

And Adelaide has promised not to bid for the $2 billion contract that Perth wants to build two amphibious landing ships.

But interstate fraternity, where the small states combined for their common good against the larger NSW and Victoria, only goes so far.

The deal may be dissolved if South Australia does not win the destroyers contract to be decided next year, with Adelaide reserving the right to bid against Perth for the landing ships contract to be awarded in 2006.

Under the deal signed in Perth yesterday, the two states will co-operate in providing infrastructure, training and maintenance of the ships to make their respective bids more competitive than those of NSW and Victoria.

"There is no doubt they will be squealing in the eastern states because they know what we are doing will make a big difference," West Australian Premier Geoff Gallop said yesterday.

"Obviously we are ganging up to make sure South Australia and WA get their fair share of defence work and shipbuilding."

Dr Gallop said Victoria had always pursued its own interests, and a united front by South Australia and Western Australia would be a "formidable force".

South Australian Premier Mike Rann will take proposals to cabinet today for more than $70 million in infrastructure spending on a new ship lift capable of carrying the more than 7000-tonne air warfare destroyer.

Mr Rann said money would also be provided to deepen the sea channel to the proposed shipbuilding site in Port Adelaide. "I can't say how much we will spend because we don't want Victoria to know," he said.

Mr Rann dismissed as "whingeing" reports in the Victorian press on Saturday saying South Australia had an unfair advantage in the bidding process because three federal cabinet ministers were from the state - Defence Minister Robert Hill, Finance Minister Nick Minchin and Foreign Affairs Minister Alexanader Downer.

The memorandum of understanding signed yesterday narrows the two bidding contests to a handful of Australian companies, tied to ports in Sydney, Melbourne, Adelaide and Fremantle.

ASC-Shipbuilding in Adelaide and Tenix in Melbourne will race for the destroyer contract, and Austal of Perth will fight against ADI at Garden Island on Sydney Harbour for the landing ships.

With the decision on the destroyer expected first, South Australian government defence unit chief executive Kevin Scarce said the state reserved the right to bid for the landing ships contract if it did not win the first bid.

Rear Admiral Scarce, who retired as a senior navy acquisitions officer last year, said the deal signed yesterday was an Australian first.

"We will get a competitive advantage because it allows us to reduce the cost of delivering the ships to government," he said.