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Commonwealth accused of sabotaging ship launch -

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PETER LLOYD: The South Australian Government has accused the Commonwealth of sabotaging the launch of the first air warfare destroyer and undermining the state's naval shipbuilding industry.

A federal audit has found the project is more than a billion dollars over budget and 30 months behind schedule.

In Adelaide, Natalie Whiting.

NATALIE WHITING: There's been ongoing speculation about how far over budget and over schedule the build of the country's three new multi-billion dollar war ships would be.

Now the figures are in.

A forensic audit has found the project needs an extra $1.2 billion and each ship will be produced two and a half years late.

But the South Australian Premier Jay Weatherill says the Commonwealth shouldn't be blaming local shipbuilders.

He says it's a kick in the guts for workers.

JAY WEATHERILL: These workers are out there re-working work which was actually inappropriately put together because designs weren't properly procured by the Federal Government to allow them to build to specifications.

NATALIE WHITING: A ceremony is being held tomorrow when the first ship will hit the water.

JAY WEATHERILL: And on the eve of what should be an incredible celebration of an extraordinary achievement we have this blaggarding of the South Australian ship building industry and the fundamental cause of the blowout is poor government decision making of both governments, federal governments of both persuasions, over a decade.

NATALIE WHITING: The Finance Minister Mathias Cormann has defended the timing of the release.

MATHIAS CORMANN: It has been received by Government, it has been concerned by Government this week and obviously we want to ensure that we can uptake the next steps in making sure that the project is completed at the lowest possible cost and in the fastest possible time, as soon as possible.

NATALIE WHITING: Those steps include opening a limited tender to bring in a managing contractor to take control or work with the alliance currently running the build.

MATHIAS CORMANN: Well what I say to the Premier in South Australia, if you want to have, as we do, a successful and viable naval ship building industry in South Australia, work with us to fix the problems that we've been confronted with. Stick - putting out head in the sand is not going to be the way to address it.

NATALIE WHITING: The Government says it won't be releasing the full audit because of commercial sensitivities.

Chris Burns from local industry group, the Defence Teaming Centre, says it needs to be released for public scrutiny.

CHRIS BURNS: If you want to be taken seriously when you release reports like that, you have to provide the details so that independent analysis can be conducted.

NATALIE WHITING: The $1.2 billion blowout has been criticised by some defence experts who say it's well above what was expected.

But Mr Burns says it's quite reasonable.

CHRIS BURNS: By political direction we acquired a design that had never been exported before. We built a brand new ship, you know, with a brand new workforce. In most other countries in the world, at this point of the build, you'd be 50 to 60 per cent over budget. To be at this point, even if the figures are right and we'll never know because the report won't be released, we're still at a pretty good position.

NATALIE WHITING: Glenn Thompson from the Australian Manufacturing Workers Union says the audit release will put a dampener on tomorrow's celebrations.

GLENN THOMPSON: The workers on this project, as I'd indicated around the process, having proved the builds from each successive ship. This is not something that the Government - you know we're quite frankly outraged that the Government would politic with this at this time.

NATALIE WHITING: There are concerns that the problems with the AWD project will damage the reputation of shipbuilder ASC. It's hoping to partner with either Japan, France or Germany to build the next fleet of submarines.

Jay Weatherill says he doesn't think the audit should affect that decision.

JAY WEATHERILL: What it shows you though, are there are powerful forces within the Federal Government that don't want to build submarines and ships here in this country and the forces within the Federal Government that are fighting on the other side of the equation, and I hope that includes the Prime Minister, need to be vigilant with the fact that there are people seeking to undermine it.

NATALIE WHITING: The Federal Government says it is prepared to make a long term investment in order to sustain the ship building industry.

PETER LLOYD: Natalie Whiting in Adelaide.