Defence Procurement Matters of Public Interest

I too would like to make some comments on this matter of public importance. I say from the outset that Senator Xenophon is embarking here on a political stunt. The facts that he is relying on are flawed, his rationale is flawed and his proposals are flawed. Let me step through those one by one.

He finished his contribution by saying that the government’s approach would mean that Australia would not have Australian workers working in an Australian company, with sovereign control over IP, generating products that we could export.

Industry come around and brief members and senators frequently. I know they have briefed Senator Xenophon. Clearly, I wasn’t there in his briefing, so I don’t know what was said. But I do know what was said in the economics committee inquiry on 4 April, when Senator Xenophon asked Saab—with a parent company in Sweden, now an Australian company in Adelaide—about the value of their work, going into dollars; about their workforce; and about their IP. And he knows because he’s been told in public, and I would lay odds on the fact that he’s been told in private, that companies like Saab—which, yes, had a foreign parent but now have Saab Australia—have nearly 400 people, all Australians, working in Australia on sovereign capability where we own the IP and we are exporting that product overseas with the support of this government.

So the whole premise of Senator Xenophon’s point is flawed, and he knows it. The facts not aligning with his political narrative, unfortunately, has not stopped him from undermining the confidence of people around Australia and particularly people in South Australia about the government’s plans; not only plans but commitments and investments towards the national shipbuilding program, which goes to industry capability and the capability that our men and women will take to sea.

Saab is not the only company in this place. Senator Xenophon’s contention is that, if it’s not a company that people immediately recognise as an Australian company, then somehow they’re not real jobs; we don’t have IP; and we can’t export. I’d invite him to go and speak to the Australians who work at Thales, who produce things like the Bushmaster and the Hawkei. That is another example of a company that has come and embedded in Australia, with an Australian CEO and an Australian workforce; it is developing Australian IP and real military capability, and it is exporting it. It also happens to employ nearly 3,200 Australians. There are 3,300 in BAE Systems and—again, IP around things like the Nulka and involvement in shipbuilding programs. The very premise of Senator Xenophon’s argument is flawed.

What he also ignores is the lessons we have learned from the programs like the air warfare destroyer and even things like the Armidale patrol boat. He mentioned that as an Australian-built boat, and it is—a great vessel. One of the reasons we had problems with that in its through-life support was that the designer of the vessel was not part of the consortium that was looking after the through-life support. So, when vessels started getting fatigue issues, there weren’t the immediate, informed steps required to address that. One of the lessons we have learnt from the air warfare destroyer—and Senator Xenophon well knows, because he sat in the inquiries where we had to see Navantia, as the designer, brought back into the mix—is that it’s important that the designer and the builder are joined at the hip in building a complex warship like Sea 5000 will be.

The government in this tender, contrary to what Senator Xenophon has said, has not gone out and said that Australian companies cannot participate. What we have said is that particular companies are not mandated. There is nothing to stop a company that we have let a contract to saying, ‘We’ll engage with Austal,’ or, ‘We’ll engage with ASC,’ if that’s what they choose to do. But the lesson we learnt from the AWD is that it is critical that the designer and the builder, the people who are managing the program, are joined at the hip so we don’t repeat some of the lessons that saw some of those very early poor productivity outcomes on the AWD.

We also learned that the issue is not about the workers. As we’ve seen with the AWD, by ship 3, they are now at world’s best practice. Guess what? In ship 2, the quality of the work was also great, and in ship 1, whilst they were ramping up, the individual worker’s quality was nearly always tiptop. It was the broader management and alliance and governance issues that let that program down. Senator Xenophon should know this because he gets briefs from industry. Just last week the Joint Standing Committee on Foreign Affairs, Defence and Trade, which I chair, had Australian industry players come into this parliament specifically to talk about workforce requirements for the national shipbuilding plan and specifically Sea 5000. The very clear message that came from those people is they are already investing in infrastructure and ramping up the size of their companies because they see that the government’s commitment through the Defence industry policy statement is a paradigm shift from where we have been in the past, like the start-stop programs over decades or the six years of Labor doing absolutely nothing to stimulate or contract for new ships during their time in office.

Not only has this government has let new contracts—and it is tendering for more—but the fundamental input to capability that industry forms has now been formally recognised through the first principles review. The Defence industry policy statement makes it clear that we see the long-term value for money for the taxpayer means having capability for our Defence Force that is affordable, available and suitable for the task over its life of type. That means that we need to have Australian industry capable to actually form the supply chain, to be involved in the management of the IP, to have all the design artefacts and to have the capacity to understand what those design artefacts mean so they can repair, modify and certify those ships as safe for use.

So this government is putting in place not just the policy but the funding and the contracts. People in South Australia will see in the very near future, because the contracts have been let, things like the development of the new ship site at Osborne for these ships to be built. So what we see is a government that has for the first time committed to a continuous shipbuilding program in order to give our Navy the capability they need when they need it, fit-for-task and supported by an industry that is sustainable.

Industry have welcomed this. We saw in the meeting I had last week with the industry players their commitment. We have seen the purchase of Techport from the South Australian government. We have seen the creation of the Naval Shipbuilding College, which is to be based in Adelaide. We had a lot of discussion about that last week, and the clear message from industry was that, far from there being thousands of South Australian workers out of work, they are concerned that there will not be enough workers who are skilled to actually fulfil these programs. So we had lengthy discussions about how they and the government could partner with the upskilling of people, whether they’re coming out of the auto industry, whether they’re coming out of ASC off the AWD program or whether they are kids still in school who are going to be employed in 10 or 20 years time because of the investments of this government.

So the whole premise of Senator Xenophon’s motion in this chamber today is flawed. The government is investing and taking the lessons from the past to make sure that we have a capability that is supported by an Australian workforce, generates Australian IP and is controlled by management that is here in Australia and has the capability to export. That is the absolute essence of the national shipbuilding plan. That is what industry is working towards.

The final thing I would say to Senator Xenophon is: if he is concerned about jobs in South Australia—he has been out on the stump many times about the valley of death caused by the Labor Party doing nothing for six years—how is deferring or scrapping this tender and going back to reissue a tender and extend this whole process for another six to 12 months going to help workers? Those workers are looking forward to the start of the OPV program and Sea 5000 by 2020, which this government has brought forward in order to stem the valley of death that was created by those opposite. I do not support this motion, because the Australian government has put in place a framework that will give our Navy the capability they need and give Australian industry and, therefore, generations of Australians high-skilled jobs for decades to come.