Senate debates

Wednesday, 16 August 2017

Matters of Public Importance

Defence Procurement

3:53 pm

Photo of Stephen ParryStephen Parry (President) Share this | | Hansard source

I inform the Senate that, at 8.30 am today, three proposals were received in accordance with standing order 75. The following proposal from Senator Xenophon was selected by lot.

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

The urgent need for the Government to re-initiate the Future Frigate tender to permit Australian shipyards to take the lead role in the ship build.

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

3:54 pm

Photo of Nick XenophonNick Xenophon (SA, Nick Xenophon Team) Share this | | Hansard source

This is a matter of great public importance. There is an urgent need for the federal government to re-initiate the future frigate tender to permit Australian shipyards to take the lead roll in the ship build. The future frigate program is a $35 billion program and the proper execution of the future frigate project is itself part of a much broader $90 billion continuous naval shipbuilding plan. It is critical to Australia from a national defence perspective and it is also critical to the nation from an economic perspective.

When the government released its Naval Shipbuilding Plan on 16 May 2017, it stated:

This national endeavour is the most significant nation building project Australia has ever undertaken. Larger and more complex than the Snowy Mountains Hydro-Electric Scheme and the National Broadband Network, , the Naval Shipbuilding Plan that the government is delivering will engage all states and territories through their contributions to naval shipbuilding and sustainment of both current and future naval vessels, or as contributors to industry supply chains, or providers of national workforce development and skilling to meet the growing need for skilled naval shipbuilding workers across the sector.

Well, that's the plan. But let's look at the plan in practice.

Despite the fanfare and the rhetoric, over the past few weeks we learned slowly that the bulk of this national endeavour, this strategic defence program, will be executed by foreign companies. On 20 July this year at a hearing of the Senate Economic References Committee inquiry into the future of naval shipbuilding—I was there, with Senator Carr—it was revealed that Defence knew, and for some time had known, that ASC would have no substantive role in the Future Submarine program. And we now hear that ASC or Austal will have no substantive role in the future frigate program.

How did we hear this? Not as part of the defence white paper, not as part of any announcement of the Naval Shipbuilding Plan and not through FOI either. I tried that in May, only to be knocked back on the grounds, 'A release of the requested information for the request for tender would invite heightened public and media discussion on the suitability of the Commonwealth's Australian industry capability requirements.' Well, excuse me—this is a $90 billion program and $35 billion for the frigates, and heightened discussion and debate is something that should be avoided? That is absolutely wrong.

The public, the management of ASC and the workers of ASC have only found out the plans because the documents have been leaked to The Advertiser in Adelaide. And I might point out that, contrary to the minister's claim in the chamber today, this is not a leaked classified document; it is only a leaked embarrassing document. The FOI decision is under review as we speak, and I note that the FOI exemptions that have been used are the same ones used for the request I made about the competitive evaluation process for the submarines. Those exemptions were dropped as an Information Commissioner's review progressed. I expect that could well happen here as well.

To the minister, through you Mr President: most tender documents in this country are completely public. The idea that the release of an unclassified tender document could derail a process such as this is ludicrous. The decision on whether these documents could or should not be released is a matter likely to be determined by the AAT, because of the government's secrecy in relation to these documents.

But let's come back to the government's approach to the Australian continuous stable shipbuilding program. If we look back on the recent history of shipbuilding in this country, we will see that the Fremantle-class patrol boats were built by an Australian company. The Durance class supply ships were built by an Australian company. The Antarctic Division's icebreaker, Aurora Australis, was built by an Australian company. The Anzac class frigates were built by an Australian company. The Armidale class patrol boats were built by an Australian company. The Collins class submarines were built by an Australian company, and the air warfare destroyers were built by an Australian company.

Let's look to the shipbuilding endeavours of this government and the contrast. Under this government we have seen our supply ship build exported to Spain; our icebreaker built offshore in Romania; our future submarines being built by the French company, Naval Group—formerly DCNS; and now our future frigates being built by a British, an Italian or a Spanish company. Is this offshoring and fly-in fly-out shipbuilding approach seriously the government's approach to creating a sovereign shipbuilding capability? We are supposed to be trying to build a world-class sovereign shipbuilding base which will support thousands of long-term high-quality jobs directly, and thousands more through the supply chain, but, more importantly, for it to be the industry base that supports our sailors at sea in times of peace or conflict.

To do this I defer to the advice of one of the country's most experienced shipbuilding executives, David Singleton, the Austal chief executive officer. In a recent Sunday Mail article he said:

… we need to work on creating an industry that stands on its own two feet, free of government subsidy.

We cannot afford for the naval shipbuilding industry to be addicted to government welfare for its survival.

The key lies in exports and the key to exports lies in Australia owning the intellectual property behind every ship it builds.

The ability to conceive new ship designs, develop them and build them in Australia needs to be a clear focus of the future Australian shipbuilding industry.

It is critical that through our investment in submarines, frigates and patrol boats, the Federal Government secures the intellectual knowledge in the minds of Australians, resident in Australia, working in Australian companies such that we have the capacity to design new ships for ourselves and for our export markets.

Instead, we invite foreign companies to fly in and fly out of our country and to work primarily for profit. Under the arrangements set up by this government, we will see a foreign company take the lead in these nationally significant programs, a foreign company that will control the program, a foreign company that will install their own management teams in Adelaide and elsewhere, a foreign company that will choose the workforce, a foreign company that will control the intellectual property and a foreign company that will determine the shipyard's strategic direction.

When an export opportunity arises, it won't be for the local shipyard to determine if we can export; the decision will be made in the context of the corporate plans of someone in Paris, Rome, Madrid or London. It is a decision that will be made without Australian government consultation or control, by virtue of the documents that have been disclosed. The decision to construct this program in this way is fundamentally flawed. I'm not surprised by this, noting that the government made every major decision in this program before it had come up with a plan. The naval shipbuilding plan was released after the submarine CEP, after the patrol boat tenders, after the tender for the OPVs, offshore patrol vessels, and after the future frigate tender. This is really a cart-before-the-horse approach.

Finally, let me give the chamber some key data points on the likely and feared shutdown of ASC. Firstly, the submarine CEP was run with Defence not intending to have ASC having a role. ASC is going to be broken up into three entities. The first is submarine sustainment. I note that the naval shipbuilding plan did not state that the Collins sustainment would stay in Australia—that it could go elsewhere. Secondly, Australian Naval Infrastructure Pty Ltd and ASC Shipbuilding are entities, which is basically a workforce, and the future frigate tender was released with no role for ASC or Austal. Defence have been desperate to keep me from seeing those documents in the exhaustive FOI process I have been going through. They have said they don't want heightened media awareness of this and public awareness, and that is wrong. There is nothing in the ASC order book. Indeed, if Fassmer, who have teamed with Austal for the OPV, were to win the OPV competition, then ASC would have nothing.

How must it feel to be a worker at ASC today? What impact will today's news have on the ASC team spirit that has been built up as it has successfully and efficiently built the air warfare destroyers. We have recently seen Nos 2 and 3 beating world-class benchmarks. There has been real reform, real productivity and real efficiency. What impact will it have on the ASC? What impact will it have on workers as a result of future employment uncertainty and as they contemplate working for a foreign company that they have no understanding of?

This future frigate tender is flawed. It is strategically inept. It compromises our sovereign capability because we will lose the intellectual property. We will lose the ability to control our destiny when it comes to naval shipbuilding. This is the biggest procurement project we have seen—this $90 billion plan, which I know all of us support. The government needs to re-initiate the future frigate tender to permit Australian shipyards to take the lead role in the ship build. The Minister for Defence, who I believe has enormous integrity—and I have enormous regard for her competence, her capacity and her fundamental integrity—did not directly refute any of the comments that I made in relation to this. The Minister for Defence may have great integrity, but this tender process for the future frigates absolutely does not.

4:03 pm

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

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.

4:14 pm

Photo of Kim CarrKim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | | Hansard source

These are very disturbing developments that have occurred overnight with the release of the tender documents for the frigate program. I normally listen quite attentively to Senator Fawcett, who is usually very well informed on these matters, but I think on this occasion he has let us down a bit because he actually hasn't referred to the documents themselves. His case would have been so much the stronger if he were able to directly cite the documents themselves. I think when we are discussing these questions we do have—

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

Senator Fawcett on a point of order?

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

A point of order or personal explanation. I did actually go to the point that the tender just didn't mandate, Senator Carr.

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

That is a debating point. It's not a point of order. Senator Carr.

Photo of Kim CarrKim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | | Hansard source

You did state that, but you didn't actually cite the documents. Normally you would be more thorough in your presentation. You have asserted that this is a stunt. This is not a stunt. This is a matter that should concern all senators. We have been presented with evidence that we have been completely misled about what is actually going on.

You make an assertion about the level of scrutiny that occurs with the IP arrangements for the submarines. That discussion has been held in secret. There has been no documentation revealed of those matters. You talk about the skills college. Of course, the Tasmanians will point out the consequences of that arrangement with Minister Pyne in regard to the undermining of the skills college that already exists in Tasmania. The Minister for Defence Industry has been trying to deceive Australians about this contract for some time, as he has about the Future Submarines contract. In March, when the three international tenders for the Future Submarines were released, the minister said:

This $35 billion project will create thousands of jobs in my home state of South Australia.

It will create knock-on benefits up and down the supply chain across the country.

The government is getting on with it, making good decisions as early as possible to give Australian industry and the ADF the certainty they seek.

But the minister did not release the request for tender publicly, and now we can understand why. The documents that have actually been released to the media show that the government has been engaged in a fraudulent exercise. Nothing in these documents guarantees the creation of thousands of jobs in South Australia or anywhere else in Australia. The successful tenderer will be under no obligation to hire Australian workers. That's what the documents actually say. They're not under any obligation to use an Australian supply chain. Once again, Christopher Pyne has been unmasked.

Of course, Christopher Pyne is the cabinet minister tasked with the national plan for the sustainment of Australian naval shipbuilding. He has not done what he said he would be doing. These documents demonstrate that, in fact, he is not building a national shipbuilding plan but is doing a marginal seat strategy for the Liberal Party. He says he's the great fixer. He says Pyne delivers. What we have before us is the evidence of the shams and deceptions. He delivers only false promises. That's all.

In October last year the minister launched the so-called national roadshow. He said then:

The Future Frigate and Offshore Patrol Vessel programs will directly create over 2500 jobs for Australians and will indirectly support the jobs of many thousands more. However, to ensure this occurs, it is critical that we provide Australian companies with opportunities to enter the supply chain.

'We will ensure', he said. That's not what the tender documents actually say. In fact, they say exactly the opposite. The government's under no obligation to actually go to any contractor. There's no mandating of Australian suppliers.

What is critical about this is that the government is really only saying, 'Well, you get the chance to bid for the work, but that's about it.' The request for tender does not stipulate that Australian firms should even get the opportunities that the minister promised. There is no indication of the 2,500 jobs in South Australia or where they might come from. This is despite the extraordinary skills of the workforce at the ASC—a workforce, of course, that built the air warfare destroyers. This is what we found out with the submarines contract. The ASC will be locked out despite what we were told prior to the contracts being awarded to the French. There were glossy pamphlets put around that specified that this is the plan.

We then discovered at the last round of hearings at the Senate Economics References Committee that the French company has no intention of involving the ASC. What the document states is:

The successful Tenderer will not be directed to utilise any particular shipbuilding workforce or engage any particular provider of shipbuilding services.

There it is in black and white. There is no plan to sustain Australian shipbuilding. There is no plan here for the Australian workers—no plan for Australian jobs. But, just in case we might have this idea that it is a lack of obligation on the successful tenderer, and if that wasn't clear enough, the document goes on:

In particular, the Commonwealth is not mandating that the successful Tenderer use the workforce of ASC Shipbuilding Pty Ltd currently working on the AWD Program.

I repeat that:

… the Commonwealth is not mandating that the successful Tenderer use the workforce of ASC Shipbuilding Pty Ltd currently working on the AWD Program.

It is true that the minister never said they would. But he did say this:

Common sense suggests that everybody who has worked on previous shipbuilding projects, who is looking for work on the Future Frigates, will be first in line—

I emphasise those words: 'first in line'—

as the Government looks to not just maintain the skilled workforce but expand it.

That was said on 15 August this year. The government, of course, is obviously a great fan of Lewis Carroll's Alice's Adventures in Wonderland. Those familiar with the work will recall the words of Humpty Dumpty:

When I use a word … it means just what I choose it to mean—neither more nor less.

There could be no more Humpty-Dumpty-like figure in Australian politics than Christopher Pyne, because when he talks about 'common sense' he actually means, 'Whatever I think I can actually get away with,' and when he talks about not just maintaining the skilled workforce but expanding it, what he actually means is: 'Nothing's going to happen'! So, to misquote the title of Lewis Carroll's story, it's a bit like 'malice in blunderland'.

Unfortunately, this is not a story that one could get any humour out of. This is a minister in a government that ought to face up to its responsibility and to understand that these are real people in a real industry with real problems demanding the support of their government. After all, the government is spending only $35 billion on this project alone.

And we see shameless deception. Remember: the government started off on the submarine program saying that 90 per cent of the submarines would be built in Australia. Remember that comment? Well, we made inquiries. We heard it wasn't anything like that. Mr Brent Clark from DCNS declined to repeat the figure. In fact he said:

I do not want to give this committee a figure …

When asked about the possible role of the submarine builder ASC, he said:

Very little at this stage.

Christopher Pyne told South Australia he would deliver. What he actually meant, I think, was that very little would be delivered.

Australians are sick and tired of lies, deception and broken promises. This request for tender should be withdrawn. The fraudulent tender process has been exposed. I'll be referring this matter to a Senate inquiry for another hearing on this matter to get to the very bottom— (Time expired)

4:24 pm

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

I rise to add my voice to this motion as moved by Senator Xenophon today. What an important issue this is for those of us who live in South Australia. Our state has the highest unemployment rate in the country, and youth unemployment is even higher than the average unemployment rate.

We know that jobs in our state are absolutely critical and we know we need a proper jobs plan for South Australia. However, all we seem to get from this federal government are more cuts and broken promises, and ministers who fly in and have a go at our great state, a bit of a laugh at our expense. We have seen that from the Prime Minister. We have seen that from the Treasurer. We have seen that from the Deputy Prime Minister. The list goes on and on and on. Oh, and let's not forget the Minister for Resources and Energy: he had a good laugh, didn't he, at South Australia's expense? He did nothing to create more jobs for our state but decided to make himself a bit of a comedian by having a good old crack. South Australians are sick of it. We're absolutely sick and tired of this federal government kicking our state, kicking our workers and doing nothing to help when it comes to the jobs crisis in South Australia, at a time when industries are doing their best to get themselves on their feet to re-power our great South Australian economy.

We know that the attacks come in the form of attacks on the renewable energy industry, and all the jobs currently being created and continue to be created for our state. We know all about the false hope given when the federal government said that it would save the jobs at the Whyalla steelworks by doing a deal with the dodgy, corrupt, fraudulent company Adani. We know that those jobs were never going to eventuate. We now hear today that this company is in trouble for fraud charges. The federal government wants to give a billion-dollar open cheque from the Australian taxpayer out of the Northern Australia Infrastructure Fund to Adani, and South Australians should be happy that we were given a false promise that that would help save the steelworks in Whyalla—false hope, nastiness and broken promises. We know the government left the Holden workers hanging out to dry and did very little to help them transition. Holden closes in October and then what? I guess we'll have someone from the frontbench of the Turnbull government fly in and have a good crack on the first day that those workers are left without a job to go to.

Today we hear that the jobs that were promised for the Adelaide shipyards in the frigate contracts are not even guaranteed. What on earth is the point of spending all of this taxpayer money building these things, signing overseas contracts only to then say, 'But you don't have to employ any of the locals that are currently there'? The government and the minister say they can't mandate this: 'It's impossible to mandate this'.

There are plenty of other things that get done by this government. When they want to scratch the backs of their mates, they find a way to do it. When they want to deliver big business tax cuts, they do it. When they want to give a sop to the big banks, they do it. But for the workers down at the shipyard in Adelaide, well, apparently we can't guarantee that they're going to get a job. This is not good enough, Minister Pyne; not good enough, Prime Minister Turnbull. The Greens believe, fundamentally, that if we are to move forward with these contracts, if we are going to spend this money building these frigates, then there should be a local employment target. We should have a guarantee that South Australians will get jobs out of this and that those jobs will stay in our state.

Just to add more salt to the wound, we know that the government has cut a deal with One Nation in the last 24 hours to make cuts to the ABC. How many jobs does that mean we will be losing from our state, either in our regional areas or, indeed, in the Collinswood studios in Adelaide?

How many jobs are going to be lost at Adelaide's ABC, because of the deal that this government has done with One Nation?

We're sick and tired in South Australia of the federal government, the Prime Minister and his ministers, flying in, having a good kick at our state and doing nothing to help us lift the jobs numbers in our state and get young people, in particular, employed.

4:30 pm

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Minister for Education and Training) Share this | | Hansard source

South Australia, my home state, has real challenges—the highest unemployment rate in the country. These are challenges we have to face up to and be honest about—indeed they are challenges that our government is determined to do everything we possibly can to address, but of course they also require action at the local level, which has been so sadly lacking.

South Australia doesn't just have real challenges; it has an image problem fed by those who want to talk the state down. And, sadly, all too often that comes from our own state—from people who are wanting to concoct political opportunity in our own state so they can talk it down. That is what we are seeing in this beat-up, rubbish news story that is being pushed around the place today—fed presumably by Senator Xenophon to the Adelaide Advertiserand is the subject of the debate in this chamber right now. It is the biggest load of rubbish I've read in the paper for a long, long time.

Let's be crystal clear: the nine future frigates are guaranteed to be built in South Australia, mandated—to use the word Senator Hanson-Young just used—to be built in South Australia, in Adelaide, at Port Adelaide, at the Osborne shipyards. That's where they're going to be built, so where are the jobs going to be? Guess what? They're going to be in South Australia, in Adelaide, in Port Adelaide, at the Osborne shipyards.

This is nothing more than a scurrilous scare campaign. It is unnecessarily scaring the workers of Osborne and scaring the people who fear for the state's future when in fact we have a great opportunity as a state. And it does those senators in this place, who come in here and try to seize the opportunity of this scare campaign, no credit whatsoever to add to the negativity that surrounds the image in South Australia, to give another blow to the confidence of the people of South Australia. It does them no good at all.

I am saddened that Senator Xenophon appears to be leading the case in this regard. Why on earth does he think that those who successfully win a tender that requires them to build the future frigates in Adelaide would then overlook the South Australian workforce? Why on earth does he think that somehow it will be more cost-effective for them not to employ skilled workers who are there, ready and available to build the ships and instead source them from somewhere else? It's a preposterous argument; it's a ridiculous argument. It holds no water and makes no sense, and yet he perseveres with it. Senator Xenophon has renamed his local party South Australia's best. Sadly, it seems that the brand that Senator Xenophon wants to build instead is one of talking down the state, talking down South Australia and talking down the opportunities that have been created by the Turnbull government's decisions around shipbuilding.

Unlike the Labor Party, who for six years went through office consistently promising they were going to do something about new submarines but never commissioned one single ship to be built in Australia, we have got on with the job and guaranteed that, in relation to the South Australian shipyards, there will be two offshore patrol vessels, nine future frigates and 12 submarines, all generating in excess of 5,000 direct jobs and thousands more indirect jobs. The future frigates alone, starting in 2020, will generate around 2,000 direct jobs and thousands more indirect jobs. And yet we have Senator Xenophon, the Labor Party and the Greens all conspiring to say, 'Those jobs won't exist.' Of course they'll exist: they'll exist in Adelaide, because that's where the ships are going to be built.

This is nothing but scuttlebutt and, of course, if we actually took it literally, the result of the motion that Senator Xenophon has brought to the chamber would delay the project by months, if not years.

That's the absurdity of the proposition on the table: thousands of jobs would truly be at risk if we went right back to the start of this tender process, as Senator Xenophon seems to be suggesting in his motion, and allowed it all to start again. The tenders are in and being assessed. We'll have a winning tender in the not-too-distant future. We'll have certainty that work is going to start in 2020. We'll have certainty that people are going to be employed in Adelaide to undertake this work. We'll have guarantees that there are actually going to be opportunities, jobs and prospects for people to get on and undertake this very valid work. It was only last week that the request for tender closed. Yet now we're confronted with a matter of public importance motion suggesting we should go back and start it again. It's not only ridiculous, it's downright dangerous in that it would further undermine capability in South Australia if we were to do that. It would further extend the valley of death that the six years of Labor inaction created in terms of the shipbuilding workforce in South Australia.

I cannot believe that all those parties opposite want to play such politics with this enormous national investment activity. Our shipbuilding program, our defence investment program as a government, is the largest investment undertaken in this country since the Snowy Mountains Scheme. It is about building a sovereign, indigenous, naval shipbuilding capability in Australia. For the first time, difficult decisions have been made about prioritising shipyards, about making sure that we have a critical mass of work and about making sure that we have an ongoing platform and body of work. All of these decisions have been made in the interests of ensuring that Adelaide is the hub for this construction activity decades into the future. This is the golden goose that the Turnbull government has laid to help South Australia, to guarantee jobs for South Australia, yet those playing politics want to kill off the golden goose before we even get the benefits of the egg. We're going to see contracts signed, people employed and jobs starting now, within a realistic time frame. The offshore patrol vessel work is due to start only next year and the future frigates are due to start only a couple of years later—with those contracts all underway.

I hope that people will take a step back from the lunacy of the newspaper story that's been fed out today and realise the logic that with $90 billion worth of shipbuilding activity in the pipeline there is certainty for South Australia that there is going to be a big uplift in work, in economic activity and in job prospects. The real debate that we should be having is a debate about how we capitalise on it, how we make the most of it. That's why, as a government, we have not only sought to pursue the work around the delivery of these projects but also coupled that with activities in terms of defence industry investment in SA, the building of further capability and the building of innovation related activities in SA. All of this is about ensuring that those businesses that will be supplying into our sovereign, national shipbuilding capability in South Australia are encouraged to look at how they can leverage off that, leverage further opportunities for feeding into supply chains of other defence projects around Australia and around the world and leverage further opportunities to supply outside of defence into other related high-tech projects.

It does those who come in here no credit whatsoever to run this shameful fear campaign and suggest that the workforce won't be in SA. They are, of course, stoking fear rather than helping to stoke the future engine of South Australia's workforce. The defence industry will be that engine. It will be driving and sustaining a new wave of high-tech, highly-skilled jobs in South Australia. The debate we should be having is about how we make sure we maximise that so that, in the future, Senator Leyonhjelm—who I know will speak in a second—will no longer be able to run the types of appalling lines that he runs about my home state, of which I'm proud. In the future, he and others will see that we're a proud state, a state with a great history and a state that is achieving much by using the investment in the defence industry in our state to grow more jobs, more industries, more expertise and more capabilities. These are the types of debates the Turnbull government is focused on: making sure we deliver on the future frigates, the patrol vessels, the submarines, and making sure we maximise the workforce in SA, but also making sure we then leverage off that opportunities to generate even more capability for our state and future, even more jobs, so that the 5,000 direct jobs are just the tip of the iceberg. That's our focus. Shame on those who want to scare the workers! (Time expired)

4:40 pm

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

Before I speak in support of this MPI, I want to put on the record that the initial image problem Senator Birmingham alluded to came from the government side of the chamber when the then Senator the Hon. David Johnston said: 'I wouldn't trust the ASC to build a canoe!' And where is David Johnston now? The government of the day had to do the repair work. They had to do the damage control. Under former Prime Minister Abbott and under Prime Minister Turnbull, they have been in damage control—and we just thought there had been some progress made.

It's interesting to note that, on 18 April 2016, the Hon. Christopher Pyne, accompanied by the Minister for Defence and the Prime Minister, promised continuous jobs for workers at Osborne in my state, probably for several generations, because of this promised activity. We know, through some paperwork that Senator Xenophon has got, that the tender document speaks in another way:

The successful tenderer will not be directed to utilise any particular shipbuilding workforce or engage any particular provider of shipbuilding services …

And then it says:

In particular, the Commonwealth is not mandating that the successful tenderer use the workforce of ASC …

Those two statements appear to be poles apart. So what did Mr Pyne say today? The federal Minister for Defence Industry, Christopher Pyne, said it would be impossible for the government to mandate that the local workforce, such as ASC in Australia, would be employed by the bidder. He said:

[That] would put the workforce in a ridiculous bargaining position, holding the bidders completely over a barrel.

Mr Pyne said it would be illogical for the bidders to bring a workforce from anywhere else, and he was confident the Australian workers would be employed.

The wriggling has started. They had an electoral imperative. They had to win an election. As Senator Carr said, they ran a marginal seats campaign. They convinced electors in South Australia that they were on the right track and that ASC—with the addition of Austal, from your own fair state, Acting Deputy President Sterle—would be at the forefront of it. Austal briefed me, as Senator Fawcett has said, and I was impressed. For every ship they build in Australia they build five overseas—for the United States. They were teaming up with ASC and they're not going to be mandated. This government will say, 'Pick whoever you like.' We've got an Australian company, without government assistance, that makes one ship in Australia and five overseas. But we're not going to say, 'You have to look at them.' We're not going to say that they, with the partnership of ASC, are the place to go. We're not going to say that, because, according to Mr Pyne, it would put them in a ridiculous bargaining position.

Mr Pyne goes on to say there is a workforce of 1,800 and there will be a requirement for 5,000. I know some workers at ASC. They're very proud of the work they do, they're very skilled at the work they do, and they understand how shipbuilding works. They understand that the ship is designed, you build it, you trial it and then you move on to the next project. And, like construction workers, they do accept that there are breaks in their tenure. This minister has started wriggling. Really, he's been found out. Otherwise, this would have been all glossed over and they'd have another political disaster like the one they're having this week, where they can't even hold their heads up in parliament. They're the government, their heads are all down, and here we go again. They've been saying one thing and doing another. When the spotlight comes on them, heads go down and wriggling starts. The Hon. Christopher Pyne starts making contradictory statements—four dot points. Read them carefully. Think about it. On one hand, he's saying we'd put the workforce in a ridiculous bargaining position. On the other hand, he's saying there are only 1,800 of them, and we need 5,000. He just goes round and round and round.

I do take the point from Senator Fawcett that there is good work being done in this space. Intellectual property in Thales and Saab and BAE—all of those things are vital to our state, and they do employ South Australians. But the minister ought to get this one right.

4:45 pm

Photo of David LeyonhjelmDavid Leyonhjelm (NSW, Liberal Democratic Party) Share this | | Hansard source

I hesitate to interrupt this argument between South Australian senators, but we are talking about our money, not South Australia's. The question before us today posed by Senator Xenophon is whether to reinitiate the future frigate tender to permit Australian shipyards to take the lead role in the ship build. There is absolutely no need to do such a thing. There are three companies, SA based, short-listed for the future frigate tender. If we stay on track, the competitive evaluation process will be completed sometime during 2018. As an undeserved perk for South Australians and a threat to taxpayers and our national security, construction will begin in Adelaide in 2020.

That's too bad. I am alarmed at the estimated $35 billion cost, and I am confident that this price tag will only increase if the tender is reinitiated. The Australian people have already been subjected to the unedifying spectacle of the Future Submarine project being held hostage to the South Australian vote. We could have bought 12 of the Japanese Soryu class submarines, which would have been perfectly adequate for our purposes, for around $20 billion. Building 12 submarines in Australia is simply frittering away $30 billion. That probably works out at around $5 million for every job created, making the new submarine project the most expensive job creation scheme in history. Then again, since I suspect the government's main priority is saving Christopher Pyne's seat, it's probably $30 billion to create just one job. We could have taken a random 10,000 unemployed South Australians and given them each a million dollars for picking up rubbish in Rundle Mall. Even that would have saved the taxpayer $20 billion.

Now Senator Xenophon wants us to do it all again with the future frigates. Is there no end to how far the South Australian snout can go into the taxpayer trough? Why attempt to buy South Australian votes when any amount of money is never enough? How long must we wait for a supposedly Liberal government to adopt a defence procurement policy of buying proven military platforms at the best price, no matter where they are made? Such a policy would save the taxpayers scores of billions of dollars and guarantee the delivery of proven capability on time and on budget. Instead, with muddled aims of job creation and developing domestic industrial capacity, diverting Defence from its primary goal of defending the country, we see constant cost blowouts, delivery delays and performance failures. How many failures like the Collins class submarine and the air warfare destroyer fiasco do we have to suffer before our government realises that the way to create jobs is with tax cuts and deregulation, not subsidising grossly inefficient domestic microindustries?

Senator Xenophon knows that the future frigate tender will not be reinitiated. He has called for this so that he has something new to complain about and someone else to blame for South Australia's woes. How typical of South Australian politicians.

4:49 pm

Kimberley Kitching (Victoria, Australian Labor Party) Share this | | Hansard source

This week has probably felt like an incredibly long week for the government, and we all know the common political maxim 'a week is a long time in politics'. But I would like to take the Senate back to a time which must feel like an absolute aeon ago, and that is last December, when the member for Sturt went on a series of defence industry roadshows which were held in Perth, Brisbane, Darwin, Melbourne, Hobart and Sydney. In those roadshows, he promoted job prospects for major defence projects, specifically including the future frigates program. The Melbourne roadshow, I believe, happened in December.

Contrary to Senator Leyonhjelm's statement that we're only really dealing with South Australia here, Victoria as well is affected. During one of those roadshows, Mr Pyne stated that the future frigate program and the offshore patrol vessel project will directly create over 2,500 jobs for Australians and will indirectly support the jobs of many thousands more. However, to ensure this occurs, it is critical that we provide Australian companies with opportunities to enter the supply chain.

I now go to today's matter of public importance on the future frigate tender process and to the article that appeared in The Advertiser this morning. A part of the problem, a part of the reason this matter of public importance has arisen and why the article was in The Advertiser today is because unfortunately the Australian public has learnt not to trust the words of this government. So when the government says they are committed to doing anything, people question what that actually means. They're seeking reassurance. For example, they learnt what happened to another shipbuilding project, the Collins Class submarines that Senator Gallagher alluded to already. When there was some concern from the government about ASC, they shut ASC out of that process.

We have another shipbuilding project, the future frigates project. When the government and Mr Pyne say the government is 'committed', everyone quite rightly asks, 'Well, actually, what does that mean?' This debate is seeking reassurance from the government that in fact they actually say what they mean and that they will be held to account on this project. Imagine being a South Australian and you think there's a shipbuilding plan lauded by the Prime Minister, another person who sometimes doesn't live up to his commitments. You might actually say, 'I don't believe him.' And that is the problem we're discussing here.

I want to turn to Victoria because Victoria is also affected by this. Victoria has a proud tradition of shipbuilding, particularly in Williamstown. As little as three or four years ago, the Williamstown shipyard employed 1,000 workers. There will be no investment anymore in Williamstown. Where do those people go? What kind of work will they get? The reason that there's concern about the language of the tender document is because those tender documents say one thing and the government says another; there is a discrepancy and an inconsistency between those documents and the government's statements and the promises they make. Where do the Victorian workforce which might be part of a supply chain go? What do they do? Do they look at that article today and say that once again there's been another promise from this government and it's not worth the paper it's written on?

Senator Birmingham said his colleagues were talking down the state of South Australia. I don't think they are. I think they're merely seeking reassurance that Senator Birmingham's cabinet colleagues have remained true and consistent to the promises they made, and that Australia will be a part of, indeed the main part, of the shipbuilding program. Mr Pyne is quoted as saying in The Advertiser (Time expired)