Monday, 17 September 2018
Future Submarine Project; Order for the Production of Documents
That the Senate take note of the statement.
The minister's response to this OPD is totally unacceptable. The idea that the Senate is not permitted to have visibility to basic cost information is totally ludicrous. We are dealing with a $100 billion project. The public interest lies in disclosure at the very least of basic information. I will describe to the chamber what number is being sought here. It's not a number of a submarine that might be sold into another market. It's not even a real submarine; it's a preconcept design—that is, it is an indicative design to set very top level requirements. Since DCNS, now Naval Group, won the CEP, the Commonwealth has paid $143 million to Naval Group France and another $42.7 million to Naval Group Australia to advance a detailed design. As the minister has indicated, Admiral Sammut has testified to the Senate at estimates that we will not know the price of the Future Submarine until 2022 when the submarine's critical design review is conducted. The number the Senate has sought in this OPD is not a commercial number.
The refusal by the minister of this non-commercially sensitive number being tabled is made more offensive by the fact that the Commonwealth Procurement Rules make explicit reference to the fact that, whilst the need to maintain confidentiality is important, it must always be balanced against the public accountability and transparency requirements of the Australian government. The Commonwealth Procurement Rules state that officials should include provisions in request documentation and contracts that alert the potential supplier to the public accountability requirements of the Australian government, including disclosure to the parliament and its committees.
The minister talked about negotiations that are underway. Yes, we are in negotiations. We are negotiating a strategic partnering arrangement with DCNS of France, but there is no number in there. There's no build number in that particular negotiation, because we will not, as the minister stated, know the cost of these submarines until 2022.
The Future Submarine project is an important project. It's important both for national security reasons and for industrial economic reasons. Our Future Submarines are critical to our defence. They have capabilities that are ever more important in a day and age where almost anything can be seen by satellites and other remote-sensing equipment. Peacetime roles for submarines include basically having the deterrent so that we don't ever have to go to war but also getting ready for war: making sure our sailors can go to sea and train, making sure they can develop tactics for their submarines and making sure that they can keep an eye on neighbours through intelligence-gathering exercises or operations. They also can be used for policing activities, for counterterrorism roles, for fisheries patrols and also for Special Forces operations. That's just in peacetime. In wartime, we crank that up to antisubmarine warfare, antishipping warfare, mining and Special Forces operations. The Future Submarine is an important capability. It's also important from an industrial perspective. It's part of the government's naval-shipbuilding program, which is an important program and one that Centre Alliance supports. We can't get this wrong.
However—moving to the costs—at the start of this project, back in 2009, the number being bandied around for everything was $50 billion. That was for everything. The Defence 2016 Integrated Investment Program indicated that the Future Submarine design and build would be $50 billion on an 'out-turned price basis', meaning that things such as inflation were built in. On 20 May this year, Defence gave evidence to estimates that the Future Submarine design and build cost would be $50 billion in constant dollars, as the minister has just reiterated. To make sure everyone's clear: that's for acquisition. There's still another $50 billion being set aside for sustainment.
On 6 June this year, the Australian Strategic Policy Institute indicated that the figures provided at estimates equated to a design and build cost of $79 billion and a sustainment cost of $124 billion in out-turn dollars. Let everyone be very clear. We're talking about a program that is worth close to $200 billion. We spend lots and lots of time in this chamber debating personal tax cuts, corporate tax cuts and a whole range of cuts to expenditure, and yet this $200 billion program has almost gone unnoticed. We've got a project that started off at $50 billion and has doubled, and the Senate is blind as to the reasons.
As I revealed in question time on 20 June, the German submarine builder TKMS wrote to then Minister Payne reaffirming their offer for the design and construction of twelve 100-per-cent-Australian-built Future Submarines. Their letter stated that they would have built 12 submarines that would have met Australia's requirements, in Australia, for a maximum of no more than $20 billion for the project. It's off the back of that that I want to know what the French number was. We have an acquisition cost of $50 billion in constant dollars. The submarines should be less than $20 billion. Where's the additional money being spent?
The minister has indicated that there are additional things that need to be factored in: the cost of the design; the cost of the investment in science and technology; the delivery of logistic supports, including spares; the design and construction of a submarine yard down at Henderson, in Western Australia; wharves; training centres; crew facilities; land based test facilities, including test sites for mechanical component testing before components are installed into the submarine; a propulsion land based test facility; combat system and integration facilities; and so forth.
But I've been around submarines for a long, long time, and the numbers don't add up. For a project of such value, we need much more oversight. It's not unreasonable for us to understand what the basic cost was that DCNS offered when they won the CEP, and I will point out that I, under FOI, have managed to obtain the final number that Lurssen presented in respect of the OPV program. The minister is right: I have FOIed this number, and it is still before the Information Commissioner, but we're going to be in a situation—as I will talk about later—where the Senate is ordering the production of documents, the minister is refusing, and then I get them under FOI. That's an almost unbelievable situation.
After receiving some answers, or responses, last week, I'm feeling even more concerned about this project. We seem to be building the most expensive submarine on the planet but designing in old technologies. For example, most modern submarines are moving to lithium-ion main batteries, with their much greater energy density—the same sorts of batteries we find in our iPads and mobile phones. They pack much more punch for their size and weight. They are at sea on Japanese Soryu class submarines, and my understanding is that the Singaporeans will put them on to their Type 218SG submarines.
Defence has advised the Senate that the first Australian future submarine will have a lead acid cell. Most modern submarines have air-independent propulsion capabilities, which improve the time a submarine can spend under water without coming up to use its snorkel to recharge its batteries. Australia, in contrast to most navies, will not be getting air-independent propulsion in its future submarines. It will, however, be getting a pump jet. Other than two trial submarines, one on a French submarine and one on a Russian submarine, conventional submarines do not have pump jets. They are inefficient at low speed, which is where conventional submarines spend most of their time, relying on that ever-so-important battery, and so are only found operationally on nuclear-powered submarines, where they have an unlimited energy source. The economics committee has heard compelling evidence from Mr Aidan Morrison, an expert in the field, that suggests that the pump jet is inappropriate for a conventional submarine, and he has done so through a very detailed paper.
Defence have a method for categorising the maturity of a technology—a scheme referred to as technology readiness levels. In an answer provided to me by Defence last week, they were unable to provide a technology readiness level for the pump jet. I find that totally amazing. It doesn't matter if it's 1, which is really just an idea, or 9, which is operationally proven—they couldn't give me a number.
So we have a submarine with a mix of dated technologies and completely new and unproven technologies—perhaps inappropriate technologies. More questions need to be asked and answered.
Moving to schedule, at best we will have a new submarine in the water in 2032, as the minister stated. A well-respected naval magazine I was reading on the weekend suggested it's more likely to be 2034. All the while, we have Russian warships venturing back into the Coral Sea, Chinese submarines regularly deploying into the Indian Ocean and talks of foreign naval bases being established in the Pacific. Yet we're designing a unique submarine that will get us to the South China Sea in the late 2030s. All the while, we have the Chinese coming to us. We have the Chinese operating their military assets in our waters today. Yet we are pitching for a high-risk, high-cost submarine that may or may not be delivered in good working order two decades from now.
We need to revisit what we're doing. This HMAS Turnbull class submarine needs to go the way of its namesake.
Finally, I wish to draw the presiding officer's attention to the list of OPDs that the minister has ignored. On 9 November 2016, this chamber requested documents related to the future submarine design and mobilisation contract. Only after an FOI released some of that information was it made available to the Senate, and then the Senate didn't accept some of the intellectual property claims that were being made by the government—that they have been left unanswered.
On 4 September, this chamber asked for the future frigate tender documentation. We were denied that documentation, under a claim of public interest immunity by the minister; but the documents were later released to former Senator Xenophon under FOI.
On 12 February, documents relating to the Australian Industry Capability Plan, submitted by DCNS to the Department of Defence in response to the Future Submarine CEP, were again denied to the chamber. Eventually, they were made available—once again, to former Senator Xenophon under FOI, after which the minister then tabled them in the Senate.
Now, in this OPD, we're simply asking: what was the cost of the pre-concept design submarine that was offered up to Australia to help us make our decision about who our partner would be? The Senate cannot and should not stand by the contempt that we are seeing in respect of OPDs. At some stage, the Senate needs to enforce its orders. It's a very important oversight mechanism, and we let ourselves down by simply letting the minister, over and over again, ignore the will of the Senate.