Brendan Nelson (Bradfield, Liberal Party, Minister for Defence) Share this | Hansard source

The reprogramming does not mean that any of the projects will not be paid for and delivered. What it reflects is the fact that the complex nature of defence acquisitions is such that, as I have said publicly in the past, it is not like going down to the Ford dealership and buying a Territory or a Ghia. This is cutting-edge, state-of-the-art, highly complex technology which frequently has to operate in a war environment. So I think the member for Hunter would appreciate that projects are not always delivered on time. In fact, our delays at the moment are averaging 14 per cent, which is an improvement from 20 to 25 per cent three years ago. So the reprogramming represents the shift of money beyond the forward estimates period for projects that by definition are delayed.

As for the specific delays, one is the Wedgetail Airborne Early Warning and Control aircraft on the Boeing 737 platform. As I said publicly from the Pentagon in July last year, Boeing has let itself down and it has let us down in relation to that. We have a remediation program for that at the moment, and only the weekend before last I met with Jim Albaugh, the vice-president of Boeing, and, three weeks ago, with the program director for this project, and we are reasonably confident in the remediation project we have got. But Wedgetail is $110 million. Another project is the M113 upgrade, which is $77 million. That is the project with Tenix, and there are some issues in relation to brakes. But, whilst there are delays in the initial delivery, we are confident that the last vehicle will be delivered as originally scheduled. Then there is the Hornet upgrade, $68 million, and the SM1 missile replacement project, $54 million.

There are also a range of issues—which contribute to the reprogramming across the forward estimates—related to foreign industry, including foreign military sales, which accounts for about a third of it. We also, as I say, have contracting delays, which account for about 13 per cent. I think it is noteworthy that errors on the part of the Defence Materiel Organisation account for less than one per cent. I think what the people of Australia and what the opposition should expect, over the forward estimates period, is to see money reprogrammed out and then back into the defence capability plan, because it is not appropriate to have a lot of money held in the DCP in the forward estimates period where we do not reasonably expect that projects are going to be delivered. But no projects have been cancelled.

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