Phillip Thompson (Herbert, Liberal National Party) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes the important role Australian small business has in the future of our national and economic security through its integral role in our defence industry;

(2) recognises the defence industry's potential for growth in electoral divisions like Herbert and other regional electoral divisions across Australia;

(3) supports opportunities to maximise the participation of Australian companies in all facets of defence procurement; and

(4) acknowledges the Government's commitment to deliver a robust, resilient and internationally competitive Australian defence industry.

Townsville is a proud garrison city with a long military heritage, and that's why I'm pleased to rise today to move this motion. Our city has been doing it tough, and defence industry opens up valuable opportunities when it comes to small business providing support to our armed forces. Small business is the engine room of our economy, and supporting small business is one of the key ways we can boost our economy. Given the fact that we have Lavarack Barracks and RAAF Base Townsville at our doorstep, there are plenty of ways in which local businesses can make sure they have a slice of the pie.

Only recently in the House I highlighted the fact that in the 2018-19 financial year there were 11,929 active businesses and 620 brand new businesses in my electorate of Herbert. It is a sector that is continuing to grow. Thanks to this, unemployment continues to fall in Townsville. Whether it's building new aircraft hangars at the RAAF base or maintaining armoured vehicles at Lavarack, there is and will continue to be plenty of opportunities for our local businesses to get involved.

The Morrison government's commitment to seeing that number continue to grow is evidenced in the latest budget. The Treasurer announced new funding of $49.9 million for new facilities for the 5th Aviation Regiment, based at RAAF Base Townsville, to support the introduction and sustainment of three new additional CH-47F Chinook medium-lift helicopters and associated integration systems. Expected expenditure on this project in 2019-20 is $33.3 million. Just last week it was confirmed that Lendlease had won this contract. This firm has a track record of employing locals, with 72 per cent of subcontract packages for a similar recent project going to local people.

This also brings me to veterans' employment, something that's very close to my heart and to the hearts of many in this place. I'd like to see the defence industry create meaningful engagement that then creates meaningful employment. Veterans know what is needed on the battlefield; therefore, they're in the right place to be at the forefront in the defence industry. I say to defence industry organisations: look at your veterans and employ within the veteran cohort, because veterans do know. I know it's a little bit off topic, but I want to be very clear: not all veterans are broken. Not all veterans can't work. Not all veterans need to be pigeonholed in the corner. I can tell you now: my colleagues, my friends and I who have been in the Australian Defence Force and are veterans who have served overseas know firsthand the capability that is needed in the defence industry space, and we need to be using our knowledge to make sure that our Australian Defence Force is supported on operations to maintain the safety that is paramount to bringing our troops home.

There are many projects happening in my electorate. Here are some more of them. The Maritime Patrol Aircraft Replacement Project will provide new and upgraded facilities and infrastructure to support the introduction of the P-8A aircraft at various RAAF bases, including RAAF Base Townsville. There is $16.1 million programmed for expenditure during the 2019-20 financial year at RAAF Base Townsville. The Joint Health Command Garrison Facilities Upgrade Project will provide fit-for-purpose, contemporary health facilities to enable a consistent and efficient Joint Health Command garrison health services model of care across the country. There is $11.1 million programmed for expenditure during the 2019-20 financial year at RAAF Base Townsville. Project LAND 121, stage 2, phases 3 and 4, will provide facilities across various bases to sustain the B-vehicle fleet, including at Lavarack Barracks. Works include new maintenance workshops and associated storage, weighbridges and loading ramps. There is $8.8 million programmed for expenditure during the 2019-20 financial year at Lavarack Barracks. Airfield capital works—and as I look up and the time runs down, there are too many to go through! There's a lot of work happening in the electorate of Herbert with the defence industry, but my big call to the defence industry is to employ our veterans.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

Is there a seconder for the motion?

Pat Conroy (Shortland, Australian Labor Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

I rise to speak to the motion from the member for Herbert, particularly the two last elements of this motion—that is, that the House supports opportunities to maximise the participation of Australian companies in all facets of defence procurement. And I applaud his valiant call for more employment of veterans.

The last point is that the motion acknowledge the government's commitment to deliver a robust, resilient and internationally competitive defence industry. While I've no doubt that the former is true, the latter is completely wrong. The government is clearly not committed to a robust and resilient defence industry in Australia, and this is demonstrated by its cuts to the defence capital budget, the inadequate levels of transparency around the defence budget and defence investment plans, and the declining effectiveness of Australian industry participation and capability measures.

Defence is currently undertaking a $200 billion investment program acquiring major new platforms across land, sea, air and key enabling capability streams. This investment should provide major opportunities for the Australian defence industry, but the opportunities are being diminished by major capital underspends on this government's watch. Following the release of the 2016 Defence white paper, the government budget papers estimated that Defence would spend $46.4 billion on its capital investment program over the four years from 2016-17. But analysis by the Australian Strategic Policy Institute has shown that every year since 2016-17 Defence has revised down these estimates and has ended up spending less than the revised estimates. The total shortfall in capital investment compared to the original estimates has been $5.17 billion over the four years from 2016-17 to 2019-20. This is a cut in anyone's language. Industry was counting on this $5 billion of capital spend that has gone missing.

To make matters worse, the government has not disclosed the reason for the spending cut. The reasons for more than $5 billion in underspending in this defence capital budget should not be a matter of guesswork for the Australian public or defence industry. The government is long on rhetoric when it comes to its defence investment plans but short on transparency. This example is symptomatic of a larger transparency problem with the Integrated Investment Program.

The IIP was released publicly in 2016 to facilitate a whole-of-capability and whole-of-life approach to capability acquisition and sustainment. It provided a guide to Defence's long-term capability acquisition plans, allocating, as I said, nearly $200 billion for investments over the decade to 2025-26. This is an important mechanism to ensure that Defence planners adopt a more integrated approach to investment. It is also a critically important mechanism to give Defence's partners in industry greater visibility of future capability demands, not to mention providing public accountability for the government's defence acquisition strategy. Yet compared to its predecessor, the Defence Capability Plan, the IIP provides minimal detail about its individual projects. In the three years since its release in 2016, there have been no public updates to reflect changes in the profile or time line for these planned investments. This is despite a commitment by the government to conduct annual reviews of the IIP in light of changes in strategic circumstances, capability priorities and developments in technology. It is despite the government's commitment to issue regular online updates to the IIP so that industry has access to current information about how Defence's investment plans are evolving.

We know projects have been cancelled because industry has told us. We know projects have been delayed because older capabilities are still in service. We know that the government has cut billions from planned capital investment in defence because the budget papers demonstrate this. There is now less ability for industry to understand Defence's investment plans than in the years before the adoption of the IIP. This matters for industry planning and it matters for public accountability. While there may be valid probity or commercial reasons for maintaining confidentiality for some changes in defence procurement plans, it is not acceptable for the government to refuse to provide any information at all on how the IIP is changing. This has negative impact on industry, especially small- and medium-sized enterprises. It means they no longer have enough information about Defence's investment plans to tool up and plan for future opportunities, and it is not consistent with the government's stated desire to work in partnership with industry.

This $5 billion of cuts to the defence budget and the lack of transparency around the government's changing strategic priorities for acquisitions demonstrates this government is far from committed to supporting the Australian defence industry.

John McVeigh (Groom, Liberal Party) Share this | Link to this | Hansard source

It is a great pleasure—indeed, an honour—to rise to speak in support of this motion moved by the member for Herbert in relation to the significance of small business and its integral role in the defence industry; defence industry's potential for growth, particularly in regional Australia; and the fact that the government is committed to just that. As a former resident of Townsville I understand the significance, as raised by the member for Herbert, of RAAF Base Townsville and Lavarack Barracks, and it's certainly the case in my regional electorate of Groom as well. I acknowledge the service to our country of the member for Herbert, the member for Solomon and others in this House.

The 2016 Defence white paper secured the future of two significant defence bases in the electorate of Groom on the Darling Downs, with the injection of $450 million across 20 years. Swartz Barracks at Oakey is home to the Army Aviation Training Centre, which primarily accommodates Army pilot and aircrew training activities. The Republic of Singapore Air Force helicopter squadron is also based at Oakey under agreement with the Australian government. Borneo Barracks at Cabarlah, just north of Toowoomba, accommodates the Army's deployable electronic warfare unit, the 7th Signals Regiment, and an electronic warfare operator training unit, the Defence Force School of Signals—Electronic Warfare.

The defence industry's contribution to my electorate is very significant indeed—some $117.546 million in 2018-19 in terms of military and civilian employee expenses, capital and operating expenses, capital investment and supplier expenses. I note that those contributions are exemplified by a whole range of projects underway at present. Airfield capital works of some $35.6 million are programed for expenditure during the 2019-20 financial year at the Army aviation centre at Oakey. There is also $11.7 million for Joint Health Command garrison facilities at Oakey, and support of air traffic management surveillance, command and control systems to the tune of $1.1 million during the same period.

As the federal member for Groom I've had the great honour of inspecting and witnessing ongoing investment in workshops, vehicle wash-down facilities, stores, administrative facilities, training and classroom facilities, mess buildings, accommodation—you name it—at the Borneo Barracks at Cabarlah just north of our city. That is a very significant base that impacts on Defence activities and capabilities right around the country and obviously wherever Australian defence forces are deployed around the world.

I'm also thrilled that Defence Science and Technology has two current agreements with the University of Southern Queensland in Toowoomba. Those opposite and all Australians should recognise the practical, on-ground works where Defence engages with our local communities and, particularly as the member for Herbert has suggested, the importance of Defence engaging with small business. I use two examples to exemplify this. FK Gardner Services in Queensland, which is a significant civil construction firm based in Toowoomba, was awarded $15.9 million in 2018-19 to provide infrastructure project management, construction, support services and repair services, particularly at Oakey, and LSM Advanced Composites will produce precision, complex, custom manufactured items using advanced composite materials to the tune of $63,000.

Whether it is the Highfields and District Business Connections, who celebrated what we do at Cabarlah; the Oakey Chamber of Commerce, who celebrated what we do, particularly the 50-year anniversary a few weeks ago of Defence in Oakey at Swartz Barracks; the Toowoomba Chamber of Commerce; or the Toowoomba and Surat Basin Enterprise—these private sector representative groups recognise the importance of Defence, particularly from a small business perspective.

Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the motion and thank the honourable member for moving it, and I support the call for proactive plans to facilitate more veteran employment in the defence industry sector. As the member for Herbert is well aware, Defence is a significant stakeholder in the development of northern Australia and, certainly, Defence has a long history in the Northern Territory. We've got a great relationship with the ADF but also with other national security agencies, our international allies—MRF–D, the Marine Rotational Force in Darwin, being a case in point—and our neighbours. I was recently in West Timor. I met with some TNI naval officers who were very much looking forward to a visit from an Australian patrol boat in the coming months. Those sorts of cooperative patrols are essential. It is just one of many cases in point. How the Australian government invests and procures to meet Australia's defence and national security needs can deliver broader socioeconomic outcomes—developing the north is an obvious one—but can also close the gap in Aboriginal disadvantage. The ongoing AACAP has seen significant and important infrastructure in the Northern Territory and, indeed, remote Aboriginal communities over some time.

In my electorate of Solomon, defence and national security agencies are very much part of our community. They're in our footy teams and we see them when we go down to the shops. They're vital. Defence spending in the Northern Territory reached, in 2016-17, $1.9 billion, which is huge for our economy. It was 7.3 per cent of gross state product. I know that the government, in their sixth year, realise the importance, at least in a rhetorical way, of the commitment that they've made to $20 billion in defence infrastructure for the Northern Territory over the next 20 years. However, there is a growing body of evidence that calls into question the strategic objectives and needs of Defence when it comes to the Northern Territory and, indeed, our northern borders. I'll cover them quickly.

To begin, Defence annual reports reveal the number of ADF personnel in the Northern Territory is at an 11-year low. This dwindling defence presence doesn't seem to correlate well with the large capital investment that we understand is going to happen in the future. What we are seeing is that some of the headline figures that Defence was going to spend in the Territory—that is, $7.7 billion in the first 10 years of the plan since 2016—keep being revised down. The figure has currently fallen to around $1 billion since 2016, which is an 80 per cent underspend in what was committed. That's a problem for us. Defence presence is dwindling in the Northern Territory in what could only be described as an unknown investment strategy. It's come at a time of great strategic uncertainty, as all honourable members would be aware.

We know that defending Australia isn't just about troop numbers in the NT or infrastructure development in the north. However, it's very hard to project force into our region if you're not providing the infrastructure spend that is required and has been committed to. So I call on the Prime Minister and those opposite to honour the commitments to defence infrastructure spend that have previously been made. We can do more to make sure that regional businesses see the benefits of defence investment in their areas. Regional businesses are full of highly skilled people—hopefully, increasingly including veterans—eager to help our country be safe through a robust defence industry. The right defence regional procurement policy will make sure that can happen.

To close, I want to thank the shadow defence minister, the member for Corio, who attended a forum on this very subject with Territory industry today. I thank him for coming. I again thank the member for Herbert for the motion.

Matt Keogh (Burt, Australian Labor Party, Shadow Minister for Defence Industry) Share this | Link to this | Hansard source

Australia is full of amazing minds and innovative workforces. At the moment, we have a fantastic opportunity ahead of us to create a sustainable, world-leading defence industry to provide jobs for future generations of Australian workers. Small- and medium-sized businesses make an exceptionally significant contribution to the Australian defence industry. They are in a unique position whereby they not only service our growing defence industry but fulfil wider, international contracts with our allies as well. Small businesses in Australia have the scope and capacity to innovatively fix the problems our Defence Force faces on a daily basis. These small businesses are the experts in what they do—whether that be in cybertechnology, engineering or manufacturing. This is not a rigid industry. The nature of these businesses means they have the capacity to evolve to best service our Defence Force and keep them and our nation safe.

These small businesses are developing capability and intellectual property that is uniquely Australian and world leading. While there is great potential for the defence industry to continue to grow and thrive across our nation, it is up to the federal government to ensure the Australian defence industry gets access to the growing defence capability, acquisition and sustainment spend. This means making sure that Australian industry content requirements are not just headlines but are mandated, transparent and, critically, enforced.

I'm very happy to declare that, in my home state of Western Australia, small businesses are certainly making their mark in that space. I recently attended the Indo-Pacific Defence Conference in Perth, where we heard from a mix of defence, business and government figures all working towards the common goal of enhancing and strengthening the Western Australian defence industry. Currently, there are hundreds of Western Australia small and medium businesses engaged in the defence supply chain, with approximately 150 businesses based in the Australian Marine Complex at Henderson. The beachside town of Dunsborough in south-western WA, whilst widely known as the gateway to our wine region, is gaining notoriety for its innovation in marine suspension systems. Nauti-Craft, based in the beachside town, has developed unique patented technology with the capacity to separate a marine vessel from a larger one simply and smoothly—something that has been embraced by Defence as a great step in improving our defence capability, particularly in amphibious and search-and-rescue vehicles.

We are developing some fantastic technology and our world-class businesses are crying out for the next challenge, with many forced to look abroad to sell their products due to difficulty in getting into the defence procurement space locally. VEEM, which is in my electorate, is a specialist engineering company manufacturing propellers, valves and other special purpose castings. They have made their mark in manufacturing and maintaining valves for the Collins class submarine, as well as maintenance and casting for Austal in their warship program and maintenance support for Special Air Service vehicles—and, critically, supplying the US Navy.

WA is not unique. PMB Defence in South Australia provides a continuous supply of the main storage batteries for the Collins class submarine. The Northern Territory's RGM Maintenance provides supply, repair, maintenance and overhaul services. Queensland's TAE is a leading provider of military and commercial turbine engine maintenance. Right here in the ACT, CEA Technologies design, develop and manufacture radar technologies. Milspec Manufacturing in New South Wales is a privately owned company that provides the Nulka decoy system, among other assets, to Defence. In Victoria, Sentient Vision Systems specialises in video analysis and surveillance. Tasmania has some fantastic marine-based offerings through Taylor Brothers and Delta Hydraulics. And we have just heard from the member for Solomon about some of the excellent defence industry offerings in the Northern Territory.

This government says it is focused on building sovereign capability. But the talk doesn't match the action. The talent and technology we have in this country are world class, yet our government continues to purchase many platforms off-the-shelf overseas rather than developing our own sovereign intellectual capability in Australia and using Australian workers. The government should be doing more to maximise the participation of Australian companies in all facets of defence procurement—not just ensuring that manufacturing labour has jobs, but also that our design, architecture, IT and IP development skills are developed and skilled and employed here too.

Finally, the individuals with perhaps the most intricate know-how of the need for and use of defence industry technologies are those who have relied on it in the field—our veterans. It is estimated that 20 per cent of the defence industry workforce are veterans. But there is capacity to do a lot more. We must always do more to assist our transitioning veterans into post-service employment, and much of this can be done through the defence industry sector.

Julian Simmonds (Ryan, Liberal National Party) Share this | Link to this | Hansard source

Can I start by acknowledging the member for Herbert for putting up this motion, for his service to our country and, of course, the service of all the personnel at Gallipoli Barracks in Enoggera in the heart of the Ryan electorate who all serve our nation admirably.

There are a lot of defence families in the Ryan electorate, both serving personnel and ex-servicemen and their families, who rely on defence industries. The serving personnel rely on our Australian defence industries to have the right tools for the job and our ex-service personnel rely on defence industries often, as the member for Herbert said, as part of future employment.

Listening to the Labor speakers on this particular motion just emphasised why it was so important for the member for Herbert to put up this particular motion: because Labor members still cannot face up to their record when it comes to defence industry spending, and it is an appalling record. The previous Labor government sat idle for six years and oversaw a depletion in the Australian defence industry which was shameful.

In stark contrast, it's been this Liberal-National government which has implemented a 10-year plan, the Defence Industrial Capability Plan, to build Australia's defence industry and create thousands of Australian jobs while boosting capability. But, if that was not enough for the Chamber, let me give you some numbers. Under Labor, defence funding was gutted by $18 billion and investment fell to just 1.56 per cent of GDP.

Mr Perrett interjecting—

Member for Moreton, this is the lowest level since 1938—inexcusable, if we are going to maintain a strong defence industry in this country. In their last three years in government, from 2010 to 2013, the Labor Party cut defence spending by 17.9 per cent in real terms—extraordinary. That is staggering: 119 defence projects were delayed under the previous Labor government, 43 were reduced and eight projects were cancelled. This risks critical capability gaps.

In contrast, we know where the Morrison government, the Liberal-National Party, stands when it comes to supporting Australian defence industry. We stand on their side. We stand on the side of having the right capabilities for our servicemen and women and we stand on the side of creating jobs for Australians. The defence industry is something that we can do well, and we will do well because of our record investment of more than $200 billion in Australia's defence capability.

As a result of the 2016 Defence white paper, the Liberal-National government is delivering capability where and when it is needed, ensuring that the Defence Force has the capability it needs, including new naval vessels, cutting-edge cybertechnology and superior aircraft. At the same time, we are maximising the involvement of Australian defence industry businesses to deliver this capability and create new jobs for hardworking Australians, because it's this Morrison government that wants to create jobs for Australians.

The member for Herbert is absolutely right: these are some ideal jobs for our veteran community as well. It was only a week ago that I was at the Gaythorne RSL talking to Soldier On, talking to the gentlemen at the RSL who undertake welfare activities. They were giving me the same message that the member for Herbert has given today, which is that these veterans are far from broken but they do have highly specialised skills in some circumstances. What they need is the support to retrain. Defence industry jobs are the perfect example of where they can put their highly specialised knowledge to use and also retrain in skills so that if they want to leave the defence industry they can and they'll have transferable skills out there in the rest of the job market.

Currently, there are over 30,000 Australians employed in our defence industry, and this number continues to grow as industry takes up opportunities. There are an additional 3,500 local Australian businesses that help maintain our border security and keep Australians safe. I'm pleased to say that Queensland is playing a leading role in this record $200 billion investment by the Morrison government. In my own electorate of Ryan, it is playing a cutting-edge role through the University of Queensland. Over $3 million has been provided by the Morrison government for UQ researchers to address some highly complex defence problems which defy conventional solutions and require cross-disciplinary research across institutional and organisational boundaries. In Ryan, we're putting our best minds towards helping solve some of the biggest problems for the defence industry.

Graham Perrett (Moreton, Australian Labor Party, Shadow Assistant Minister for Education and Training) Share this | Link to this | Hansard source

I rise to speak on the motion moved by the member for Herbert that acknowledges the important role of small business in the future of Australia's national and economic security and, in particular, the integral role that small business plays in our defence industry. I know of that valuable contribution that the more than 16,000 or so businesses in my electorate of Moreton—the sole traders, the partnerships and the small employers—make to our economy. Some of those businesses in my electorate play a significant role in the defence sector. Great local business like GJR Technologies, trading as Grabba International, at Acacia Ridge export their products around the world. EM solutions at Tennyson, a company I have dealt with over many, many years—and I've toured there recently with the member for Corio—develop mobile satellite communication systems. One of their systems is used on the Australian built Bushmaster 4WD armoured vehicle. Haulmark Trailers at Rocklea are actively involved in the design and manufacture of military trailers for a variety of applications, including the transportation of tanks and other armoured vehicles made right in Rocklea.

In Redbank, just outside my electorate, Rheinmetall Defence Australia has established its Australia-New Zealand headquarters and Military Vehicle Centre of Excellence. Rheinmetall was the successful tenderer for the Australian government's LAND 400 Phase 2 contract, announced at Archerfield Airport in my electorate. The centre of excellence will be the regional hub, with an expected program of continuous design, build and support for up to 5,000 military vehicles throughout Australia and the Asia-Pacific. It's a wonderful opportunity for more local businesses to be involved in this important manufacturing sector.

Cultivating successful small businesses in our regions and in our cities is vitally important for a growing economy. Small businesses are unique and face a variety of challenges. I recently hosted two round tables for small businesses in my electorate of Moreton. Small business owners are very busy people, but some of them took time out from their day to come into my office and tell me about their experiences. It was a wonderful opportunity for me to hear directly from our local small businesses about the challenges they're facing in the current economic climate. Apart from bills being paid too slowly, the other important message I received loud and clear was that the economy is flat and very problematic. It's no surprise to anyone who watches what is going on in the economy. It was good to hear today in question time that it's no longer a surprise to the government. The Prime Minister said in question time today, 'We know the Australian economy has gone backwards in the last quarter.'

We know that small businesses are on the front line when it comes to the economy slowing down. Wages have flatlined. What does that mean? People have less money to spend, especially in our small businesses. The median annual disposable income in 2017 was $542 less than that was back in 2009. For businesses to flourish, especially small businesses, they need people to spend money. But at the moment people don't have the money to spend. Small businesses are not only struggling, they're dying.

Of the small businesses that were operating in June 2014, more than 35 per cent are no longer operating. That's not a healthy survival rate for small businesses, especially when compared with previous years. It's no wonder these are the facts that we're faced with, when economic growth is at the lowest level since the global financial crisis. Wages are growing at one-sixth the pace of profits. That's the worst wages growth on record. Household debt has surged to record levels. It has increased by $650 billion. Business investment is down 20 per cent since the Liberals came to office. It's now at the lowest level since the 1990s recession. Consumer confidence is down. Productivity is declining, flatlining and heading south. Gross debt has risen to over half a trillion dollars. And what is the Treasurer's response—that dude who's asleep in the passenger seat? He says either, 'Labor, Labor, Labor,' or, 'Don't talk down the economy.' This is an appalling legacy for a government that has already started its seventh year. The economy is floundering and the government has no plans to turn it around.

We were told that the tax cuts would be the magic bullet to recharge the economy. In the month following the tax cuts, retail turnover fell by 0.1 per cent. They had one bolt to fire and it fell woefully short. Leading that fall were the cafes, restaurants and takeaway services. They fell 0.6 per cent. This is a government with a political strategy but no economic plan. They only believe in 'wedgeslation', not the national interest. Small businesses are not only an integral part of our defence industry; they're integral to the economic health of our nation. Small businesses are the canaries in the coal mine. When they're not doing well, the economy is not doing well. And, if small business is struggling, it directly impacts the 4.9 million people employed in small businesses. Small businesses have an important role in the future of our national and economic security.

John McVeigh (Groom, Liberal Party) Share this | Link to this | Hansard source

I thank the member for Moreton. The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.