Rex Patrick (SA, Nick Xenophon Team) Share this | Hansard source

by leave—I move:

That the Senate take note of the statement.

I thank the Minister for Defence for her response in relation to this matter, which is very important in terms of both the management of the $35 billion Future Frigate Program and the government's responsiveness or otherwise to Senate orders for production of documents—a key process that supports the Senate's scrutiny of public administration and expenditure.

The broad outline of the minister's explanation was unsurprising, given that Senator McGrath had defended the minister on Tuesday, reaffirming the claim that the release of the documents relating to the Future Frigate Program had been against the public interest last September but that as the tender process has advanced the government will review the documents and make some sections available if appropriate. That was the government's explanation on Tuesday, and the minister has added little of substance today.

Tuesday's Senate motion requiring the minister's explanation was prompted by the Defence department's release last week of almost 300 pages of the future frigates tender documentation. Those documents had originally been sought through a freedom of information request application by former Senator Xenophon in May 2017. The Defence department flatly refused the request. In August, portions of the future frigates tender documents were leaked to the media. Noting that the leaked documents contained nothing sensitive, the Senate made an order on 4 September for all unclassified portions of the tender documents to be released. Minister Payne refused the Senate's request, claiming public interest immunity. In a written statement to the President of the Senate on 7 December, the minister asserted that the release of any unclassified documents—any documents whatsoever—would damage Australia's national security and defence interests and also our international relations. This was a remarkable claim. Unclassified documents, by definition, do not contain information that if released could damage Australia's national interests. The implication: after just three days of deliberation, the minister effectively claimed that there were absolutely no unclassified documents in existence relating to the future frigates tender process.

Anyone with knowledge of defence procurement would find this a most unlikely state of affairs. Alternatively, one could reasonably conclude that all unclassified documents must have suddenly and arbitrarily been reclassified to justify the minister's refusal to provide information to the Senate—an unacceptable manipulation of protective security processes and procedures. Either way, the minister's claim for public interest immunity over the entirety of the documentation was extremely questionable. The Senate considered Minister Payne's response and, rightly, did not accept it, asking her to make a detailed explanation to the Senate. On 13 September the minister gave that explanation in a 20-minute speech that made claim that the documents could not be released because the tender process was still underway. The minister stood in the Senate and effectively suggested that the sky would fall if these documents were released. She claimed that the release of any information whatsoever would undermine the integrity of the entire process. The minister also spoke at length about national security implications, claiming that the release of any information whatsoever would 'have potential to damage our national security and the defence interests of our international relations'. With that, the Senate was presented with a blanket refusal to provide any relevant documentation—not a single scrap of paper—because the minister claimed that even a single page would destroy the tender process and jeopardise national security.

Successive governments have, of course, claimed public interest immunity in response to Senate orders for production, but this was unquestionably one of the most sweeping. It was also a particularly bold claim given that the documents in question were still subject to a separate FOI process initiated by former Senator Xenophon, a process that's significantly subject to independent review. Notwithstanding the many deficiencies in the current operation of our FOI laws, some 300 pages were eventually released by the Defence department, thanks to pressure exerted by the information commissioner of the initial access refusal by Defence.

Confronted with the information of the commissioner's assessment that many of Defence's claims for exemption from release were quite unsustainable, the department folded its cards and surrendered the material. This release, despite the future frigates tender still being underway, shows folly in the minister's argument. That process has not finished yet, and the minister knows it. The fact that the tender process has moved from one phase to another is beside the point, and it was never a valid claim for either the initial blanket refusal of Senator Xenophon's FOI application or the minister's refusal to provide documents to the Senate. The minister's claim that circumstances have now changed since September is quite bogus, nor has the sky fallen in with Defence's release of the documents. What those documents do show is the real reason for the government's refusal to provide relevant information to the Senate.

The one upside of the minister's bogus claim is that it shows how easily a government can make a flawed claim of harm to national security or harm to international relations, threshold criteria for the criminal prosecution of journalists under the new secrecy laws that the government is attempting to have passed through this parliament. As mentioned, part of the tender documents were published by The Advertiser in August last year. Tory Shepherd wrote up the story. Under the proposed laws, Tory could have faced prosecution just for doing her job. Why? It is not because what she published was in any way damaging to national security or international relations but because she had exposed bad policy. The minister had determined for convenience only that the documents were of harm. There can be no starker example of why the proposed secrecy laws should not be passed in their current form.

I will now move to the substance of the documents denied to the Senate. The documents now reluctantly released by the department reveal the fact that, contrary to the claims of both the Minister for Defence and the Minister for Defence Industry, Mr Pyne, Australia's defence industry has been given short shrift in the $35 billion Future Frigate shipbuilding program. The released documents reveal nothing short of a massive policy failure. Australian shipbuilders have been effectively barred from any lead role in the program and the Defence department has set Australian industry participation at a measly 50 per cent minimum. It is no surprise that government wished to prevent or at least delay the release of this information.

The tender, read in its totality, makes it very clear that the three overseas tender respondents—BAE of the United Kingdom, Fincantieri of Italy and Navantia of Spain—need to demonstrate that they can come to Australia, carry out a build in a government supplied shipyard, control the workforce and take responsibility for the entire build process. The tender states this:

Tenderers should be aware that the Commonwealth has selected the Tenderers on the basis of their Reference Ship Designs and their ability to undertake the design and build of the Ships. As such, the Commonwealth’s expectation is that the core design work relating to the Ships and the management and supervision of build activities will be undertaken by the successful Tenderer (or its Related Bodies Corporate) and not subcontracted to a third party entity. In particular, while the successful Tenderer may decide to engage a Subcontractor to provide shipbuilding labour resources, the Commonwealth expects the successful Tenderer (or its Related Bodies Corporate) to personally and directly manage and supervise the workforce and, in particular, the shipbuilding activities.

This is nothing short of a stab in the back for Australian shipbuilders. In effect, ASC and Austal have been excluded from the role of shipbuilder in that program. Instead, the government has invited a foreign ship designer into the country and will provide them with a taxpayer funded shipyard to build the future frigates. ASC and Austal may be the subcontractors but they will not be the shipbuilders, and the successful foreign tenderer will eventually go on to compete with those Aussie companies.

Contrary to the government's announced intention to push defence exports, statements in the tender and the intellectual property terms also make it clear that building a shipbuilding export capability is not part of Defence's game plan. On evidence provided to a Senate committee on the future of Australia's naval shipbuilding industry last September, this approach will cost Australia many thousands of export related jobs. The approach revealed in the tender documents is consistent, however, with Defence's view in their export strategy paper that defines Australian business as 'a business with an ABN'. You can't define an Australian company as one that turned up and registered for an ABN. We need to recognise and support those Australian companies that have been here for years, companies that have invested locally, employed Australians and skilled those Australians, and that are developing their own products and intellectual property. ASC and Austal are both in that category.

The tender documents also reveal that the federal government has set Australian industry participation for the Future Frigate Program at a minimum of only 50 per cent. I quote from the tender. It says:

The Air Warfare Destroyer Program has achieved Australian contract expenditure in the order of 50% across the whole Program. While the Commonwealth acknowledges there are significant differences between the Air Warfare Destroyer Program and this Project, the Commonwealth expects that this Project will achieve the same or higher level of Australian contract expenditure.

Defence industry minister Pyne is certainly the 'Incredible Shrinking Man' when it comes to Australian industry participation in major Defence projects. First he was the '90 Per Cent Man', then he was the '60 Per Cent Man' and now he's down to the '50 Per Cent Man'. But what's more important than the defence industry minister's ever-diminishing credibility is the shrinking opportunity for Australian companies and jobs.

There is still opportunity to fix this mess. The contract contains clauses that allow for the tender to be amended. It says:

The Commonwealth may amend this RFT upon giving Tenderers timely written notice of an amendment. If the Commonwealth amends this RFT under this clause 1.4.1 after tenders have been submitted, it may seek amended tenders.

That is what the government should be doing right now. They should recognise their failure to maximise Australian industry participation and amend the tender to allow Australian shipbuilders ASC and Austal to take full responsibility for the build and for the minimum Australian industry participation percentage to be significantly increased. Such a decision is unlikely to come from the 'Minister of Diminishing Returns', Minister Pyne. What is required is a cabinet-level decision, led by the Prime Minister, Mr Turnbull, who waltzed into Adelaide a few days ago for a photo opportunity with the state Liberal opposition. It would be much more useful if he returned and spent some time at the ASC facility at Osborne and announced a major boost to the required levels of Australian participation in the Future Frigate Program.

Meanwhile, the government should not be playing games of political obstruction and attempting to withhold information from the Senate on bogus national security grounds. Senate orders for the production of documents are a vital part of the Senate's scrutiny of the administration and expenditure of taxpayers' money. In this case, the documents in question relate to a $35 billion project. It doesn't get much bigger than that. The minister's response to the original order for the production of documents and her dubious explanations, then and now, come close to a contempt of the Senate in its legitimate scrutiny function. I'm sure the minister knows better and I have no doubt she would complain bitterly if she encountered similar obstructions from another government.

Madam Deputy President, with your indulgence, I direct this to you. This is the second time a defence minister has denied access to documents the subject of a Senate order for production that went on to be released under FOI. In the 44th Parliament, the defence minister, not Minister Payne in this instance, refused access to a Macroeconomics report on the benefits of conducting the Future Submarine build in Australia rather than overseas. It was only released to the Senate after the Information Commissioner had determined that Defence's claims to exemptions under FOI were flawed. Madam Deputy President, I am simply flagging something that you might turn your mind to. In the meantime, as I foreshadowed in my first speech and on other occasions, the responsiveness of the government to Senate orders for the production of documents is one of the things that I and my NXT colleagues regard as demonstrating the government's preparedness to deal in good faith with the Senate crossbench. Openness and transparency are vital foundations for successful negotiations and mutually beneficial outcomes that advance the public good. Obstruction and obfuscation will do the government no good at all.