Answers to Questions, Defence Capability Plan Take Note of Answers

I rise to take note of answers from Senator Wong to a question from Senator Edwards particularly relating to the collapse of Priority Engineering Services, a firm in South Australia that has been an innovator for many years in the area of engineering and manufacturing. This is a company that has a worldwide footprint in terms of their stamping press washers in the automotive sector, particularly in Malaysia. They have been a pivotal part of South Australia’s industry presence, stemming back to the Collins-class submarine and some of the work they did on that through to current projects.

The vindictiveness that came across the chamber from Senator Wong today was particularly disappointing, because it was about politics as opposed to the people who are involved in this company. Both Mr Peter Page and Mr Peter Parrish, the directors of this company, have invested a huge amount of their personal effort, time, resources and capital into developing this company and growing it to be a significant employer of South Australians, an innovator of manufacturing processes and a contributor to the manufacturing capability of this country. To have their efforts dismissed in such a manner is truly disappointing.

Priority Engineering is one of many firms in South Australia that has been encouraged by the government to move from their traditional markets of the automotive sector and mining into the defence sector. The government has consistently told them that there are huge opportunities for them by getting engaged with the prime contractors from overseas and getting into the global supply chain, particularly into the support for acquisitions and sustainment in this country. This has not just been verbal encouragement—$1.8 million was given by this Labor government to Priority Engineering specifically to enable them to tool up and skill their people through an acquisition so that they could participate in this defence industry sector.

For private business, that does not just come out of thin air. Those kinds of acquisitions mean that you take on debt, and debt needs to be serviced. Some of the things that bank managers look at are whether you have a business plan and where your work is coming from. In the case of defence industry, the document they look to is the Defence Capability Plan. When the government issues a Defence Capability Plan and, more importantly, announce, on the strength of that capability plan and a tender process, a preferred tenderer that they have entered into contract negotiations with, there is a high degree of expectation on the part of defence industry that the dates that have been put forward in the Defence Capability Plan and the tender will be followed through.

When the government mismanages that plan, as was the case in one of the projects that Priority Engineering was involved with, and cannot bring to conclusion a contract negotiation process with the prime—it had stretched on for months and months into new years—that spells cash flow problems for companies. It appears that one thing that this government does not understand is the reality for small business of profit and loss and the importance of cash flow. When they mismanage plans, cancel or defer programs or cannot bring to timely conclusion contract negotiations that directly goes to the cash flow, and therefore the viability, of the people who have tooled up in the expectation of fulfilling part of Australia’s national defence capability requirement.

This government has mismanaged the Defence Capability Plan. That mismanagement has had a direct impact on Australia’s defence capability through the failures of companies like Priority Engineering. If the people of Australia cannot trust this government with defence capability, and therefore the security of this nation, and if they cannot trust them with the security of their jobs, then it is time for the people of this country to change the government so that we bring in a government that truly looks at the role that defence industry plays as a part of the national defence capability of this country and puts in place defence capability plans that are achievable and predictable and will be implemented not only for the benefit of the nation but so that we can sustain the jobs and the innovation that the defence industry has so consistently brought to this country.