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

It is my pleasure to rise and make a contribution in respect of this extremely important motion on the shipbuilding industry. I reject absolutely Senator Fawcett's allegation that it is a partisan motion. Senator Fawcett gave us a very clinical dissertation on his knowledge of the defence area, but he never went within a bull's roar of the real issue—and the real issue here, for a South Australian, is that this project, being in excess of $8 billion, is the largest defence procurement project ever undertaken in Australia, making, in the peak years, an average contribution of $298 million and 1,783 jobs to the Australian economy, I believe. I would not have thought that that was a thing that could be dismissed as party political politicking. Fifteen hundred people out of the national workforce of 2,600 are based in Adelaide, so I would have thought every South Australian senator would have had a real vested interest in addressing what is referred to as 'the valley of doom', the period of loss of continuity which will potentially result in people being laid off and skills gaps re-emerging after all the good work that has been done to get a workforce skilled in this project.

I have had the opportunity, as have Senator Farrell and others, to go down and have a look at how this whole process works. It is very innovative technology. The ship-lifting capacity of Techport enables them to compete for work from Singapore—so, if you cannot get your ship refurbished in Singapore, you can slip down to Adelaide, and the lifting facility there is able to do it. They are able to win that kind of work. That is a spin-off from the investment in this project.

What really is concerning is some of the things that are happening around this project. An Australian National Audit Office report was tabled in this chamber just this afternoon. As a member of the Joint Committee of Public Accounts and Audit, I actually got an embargoed copy at around 10 o'clock this morning. It makes very interesting reading. One of the challenges that is facing the project—this is at point 6 on page 16—is this:

The Ministers for Defence and Finance announced on 17 December 2013 that the Government would establish an independent review to address ‘unresolved issues’ associated with the AWD Program, with terms of reference to be finalised in early 2014.

But what is really interesting is, before the audit report was tabled in this chamber, before members of the Joint Committee of Public Accounts and Audit had received their embargoed copies, it was all over the Financial Review: 'Audit slams $8bn warship project'. The report goes into some level of detail, and the journalist did a good job. He wrote it last night. I got the report today, and it is pretty near accurate. This is probably new ground for me, as a very new senator—a couple of years down the track—but I would really like to ask on the record here today that the Minister for Defence, Senator the Hon. David Johnston, give an assurance to the Senate that neither he nor his chief of staff or his ministerial staff briefed the Financial Review prior to the President tabling this audit report. I seek some guidance, Mr Acting Deputy President, but I think that is an entirely reasonable thing to do.

I attended a function in the President's gallery yesterday, and I listened very carefully to what the honourable Speaker of the House of Representatives had to say. Paraphrasing it, she said: 'We've eschewed guns, swords and fists and all we have left to really prosecute democracy in this parliament is words.' Let's be fair dinkum, then. If there is an Australian National Audit Office report embargoed to the department, the ministerial office and members of the Joint Committee of Public Accounts and Audit, how did it get into the Financial Review? How did it get quoted, chapter and verse, in the Financial Review?

Comments were made by Senator Fawcett that we do not want to get into a grubby political debate. Let's be serious about that. What is happening here is what has happened before. Prior to the closure of Holden in our great city, there was a Productivity Commission report sought, and there was leaking to the newspapers. It was alleged that the Treasurer might have incited Holden to take a walk—to go away—and challenged them: 'Take your money and go; we don't need you.' But here we have a really critical piece of defence infrastructure. It is subject to challenges—there is no doubt about that—but, if you look at the complexity of the project, it would not be unexpected for it to face challenges.

I know that the audit report makes comment about difficulties in a number of areas too vast for me to list here today, but I wonder at the motivation—if we are going to talk about politicking—of people who have a confidential, embargoed report who then leak that to the Financial Review. Are we being set up for another fall? Are we being set up for another 1,500 jobs, and the ancillary jobs, to be carved away?

Is Senator Farrell right? Have we lost the acumen and skill that was representing South Australia in the cabinet in the years that Senator Fawcett referred to? There were people batting for South Australia. We are now left with Christopher Pyne in cabinet to bat for South Australia—there is no Robert Hill and no Nick Minchin. If Senator Fawcett is right—and I am not going to waste my time going back over the detail of who started what contract and when, and who delivered continuity and who did not—then Senator Farrell was probably right when he said that there is no-one batting for South Australia. Christopher Pyne is not batting for South Australia. Christopher Pyne did not bat for automotive workers or the component workers.

I am absolutely fearful that we are seeing—and there was the carefully managed leak to the press of confidential, embargoed audit reports—the start of an inevitable platform where thousands more workers join those from SPC, Qantas, Toyota, Holden and the like? Is this what is being stage-managed here? I do not think that is a partisan question. I think those workers who enjoy a useful career in shipbuilding in South Australia may have some genuine concerns. The organisations that represent them, the organisations that represent the employers and the employers themselves are expressing concern. They are expressing concern and seeking some help, guidance and continuity.

I think we need to set the record straight and put on the record something that is extremely valuable to understand the situation we are in. Successive governments have accepted that the building of the DDGs in Australia would involve a premium over building them overseas. The decision to build locally is based on the desire of successive governments to retain shipbuilding jobs, facilities, project management, design skills and experience with sophisticated naval combat systems to enable through-life support of the DDGs in Australia. In other words, with the skills we gain from making them we can keep maintaining them and have a continuing naval shipbuilding industry. Successive governments have decided that is a good objective.

As part of the June 2007 second-pass submission to the government the Treasury noted that the premium associated with building the DDGs in Australia was around $1 billion, representing an effective rate of assistance of about 30 per cent. Let us think about that. Successive governments have taken the decision that we will build them here because we want the capability and the skill set, and we will pay a premium for it. That is what the Australian National Audit Office says and successive governments have carried that out. What we have here today is a leaked report and a Commission of Audit hanging over every operation and all government spending. Successive previous governments have accepted a 30 per cent premium on shipbuilding and we have a leaked 'damning report', in the words of the journalist, on AWD. Are we being taken somewhere? Are we being set up for brutal cuts which will effectively reverse the position of successive previous governments? Is that where we are going? That is my question and I would like the Hon. David Johnston to answer it.

This government, being a relatively new government—September last year—led by the Hon. Tony Abbott has played the get out of jail free card incessantly: 'Don't blame us. We were left with these books. It can't be our fault; it's Labor's fault.'

Senator Ian Macdonald interjecting—

'It's the carbon taxes fault. Surely that would have something to do with shipbuilding; that would have put them out of business. It's the carbon taxes fault'—you will get away with that for only so long, Senator Macdonald, and then the reality will come through. I do not think anybody ever voted for a tax, and that is really where the opposition to the carbon tax came from. It is basically an impost and no-one votes for that. You won the election—I have got no problems with that—but I do not like what is happening now when we are closing down opportunities for Australian workers and their families to enjoy decent jobs.

The moment that there is an ounce of difficulty in the economy, whether it be in the airline industry or the automotive industry—and now perhaps in the shipbuilding industry—the immediate response from this government is: 'It isn't our fault. It is the state of the books. It is the carbon tax.' Sooner or later that excuse, that get out of jail card, is going to run out, because you are the government and you are in charge of making decisions. You have your Commission of Audit and you can decide to support this industry and continue useful, well-paid, high-skilled, high-value jobs that support workers and their families right across Australia, particularly very importantly in South Australia. You can decide to go that way or you can decide to go the way that appears to be only too apparent.

There is an embargoed report which we were all waiting to see. It is in the Financial Review, who do not wait for parliamentary processes—'We don't need to wait for the parliamentary process.' Rather than waiting for the document to be tabled here after question time by the President, we could just pick up the Financial Review because someone—and I hope Senator Johnston is able to give us assurances that it was not his office—had fully briefed them and leaked the findings. This is an ongoing fact with this government. The debt guarantee with Qantas might be there, but it might not be.

The other day Alan Joyce said, 'The carbon tax doesn't worry us.' When you think about it, with 48 million passengers a year, $100 million comes back to $2.13 a trip—and I will be corrected on the maths.

He says he cannot recover it off the passengers, I am not sure that that is correct. I remember a levy of far higher than $2.13 being imposed on the airline industry by the Howard government. I am not really sure that, in the scheme of things, with 48 million passengers a year carbon is a huge issue. On being admonished by the Hon. Joseph Hockey, the CEO of Qantas decided, 'Oops! The carbon tax is a huge issue for us.' He was straight-up, but at least he is consistent. I make my point: are we being set up in this area? Do we really have to be fearful that 1,500 workers in Adelaide, who currently enjoy good, well-paid and high-skilled jobs, are the next cohort of people who will be sacrificed by this Liberal government? They may be sacrificed by a decision—which would be honourable and upfront if someone were to articulate the position, the reasons why, and say 'Look, this is what we are doing. This is how it goes. This is our decision as a government.' But it is not likely to be that way. It is likely to be death by a thousand cuts, which seems to be the way that a lot of decisions are emanating from this government. It is likely that they will say, 'Okay, we'll put a bit in the Financial Review saying "It's all gone down the chute, and things are not going well."'

I had a very interesting answer from the CEO of Defence Materiel Organisation in the Joint Committee of Public Accounts and Audit hearing today. I put a very provocative question to him. I put this in the context that there has been approximately $65 billion worth of expenditure by DMO in their model. They said to us that they have been seven per cent under budget. My immediate question was: what was your contingency? His answer was:

It varies for projects, but it averages at about 10 per cent and we are advised that that is a reasonable contingency amount for the type of projects we are doing.

I make that point in the context that this report has identified problems. That is very clear. It should be debated in the appropriate places. It should be considered by the appropriate state governments, the appropriate people in the industry and the appropriate people in Defence. The recommendations of the report are all agreed by Defence. So the work to do is to get to that challenge where a budgeted project can be completed within contingency and under budget. That is the work that we need to do; the alternative is that this Liberal government will simply say, 'Chop, chop, chop. We'll cut funds to this project.' There will be a valley of death. The skills will exit and move to other sectors, and we will not be able to resurrect this program. That is the fear. I would be very happy if any of the following speakers could put my mind at ease and—more importantly—put the workers in South Australia in this industry in a better frame of mind, because it is not all that positive an outlook at the moment. Another 20 minutes from Senator Fawcett outlining what Labor has done wrong is not going to put anything on the comfort side for those workers who rely on senators for South Australia to represent them.