Australian government to pay French company $830 million over scrapped submarine deal

The Australian government will pay $830 million to French company Naval Group after scrapping a deal to build defence submarines in South Australia.

Australia’s current fleet of Collins submarines were set to be replaced by conventional ones constructed by Naval Group.

The Morrison government decided instead to pursue nuclear-powered submarines under the AUKUS partnership.

Prime Minister Anthony Albanese said his government had reached a fair and equitable settlement with Naval, that would “rule a line” under the torn-up contracts.

As part of the arrangement, Australia will pay Naval Group $555 million euros or about $AU830 million.

“It follows, as well, discussions that I’ve had with President (Emmanuel) Macron and I thank him for those discussions and the cordial way in which we are re-establishing a better relationship between Australia and France,” Albanese said on Saturday.

The broken-promise initially looked to cost taxpayers up to $5.5 billion, but Albanese says the total has been reduced to $3.4 billion, taking into account monies already paid.

Albanese said the previous Liberal government’s mishandling of the situation is to blame.

“It still represents an extraordinary waste from a government that was always big on announcement but not good on delivery.”

Some details of the settlement will remain confidential due to their commercial nature.

Albanese hopes the arrangement will be a step forward in repairing Australia’s relationship with France, saying the relationship between the two countries has deep historical ties.

“I’m looking forward to taking up president Macron’s invitation to me, to visit Paris at the earliest opportunity.”