Senate debates

Thursday, 6 March 2014

Motions

Shipbuilding Industry

4:17 pm

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

On behalf of Senator Carr, I move:

That the Senate—

(a) recognises:

(i) the vital contribution of the Australian shipbuilding industry as an employer, a storehouse of advanced manufacturing capabilities and a strategic asset, and

(ii) the urgent need for the Government to bring forward project work to ensure continuity of industry development, growth and employment;

(b) is gravely concerned by:

(i) the scheduled end of project work in three Australian shipyards in 2015,

(ii) the severe consequences of the resulting project trough, including:

  (A) the retrenchment of more than 3 000 skilled workers,

  (B) the crippling of the shipbuilding supply chain, and

  (C) the forced closure of research projects and facilities supporting shipbuilding and advanced manufacturing,

(iii) the heavy costs of rebuilding lost capabilities and retraining workers to meet future defence needs, and

(iv) the threat to national security posed by the erosion of local capability; and

(c) calls on the Government to immediately:

(i) identify suitable project work to be fast-tracked and make a public commitment to those projects with a revised timeframe for tendering and delivery,

(ii) recognise that this cannot wait for the Defence White Paper process to be concluded, and

(iii) incorporate the long term opportunities for the Australian shipbuilding industry as a strategic priority in all future naval procurement plans.

I think this is an especially well-written motion. Coming from South Australia as you do, Acting Deputy President Edwards, you will appreciate the significance of this particular motion in relation to the Australian shipbuilding industry. It talks of the need for the current government to bring forward project work to ensure that the terrific work that is being done in the Australian shipbuilding industry and in particular the shipbuilding work being done in South Australia, although that is not mentioned in this particular motion. The point Senator Carr makes in his motion is that there is an urgency about what potentially is an end to the shipbuilding industry unless projects are announced so that when the current array of shipbuilding projects comes to an end next year there is something to replace it.

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

Your government was very good at announcing them—

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

I will take that interjection. Let us just go through some of the things that happened during the period of this government. Perhaps the first place to start, when we look at South Australia in particular—and I know we have two South Australian senators in the chamber at the moment—is to look at Holden. What happened there? It is a very simple proposition: all this company needed, sometime after 2017, was $80 million in support from the federal government. What happened? This government goaded Holden into leaving Australia. That is a shocking development for the country. It is a particularly shocking development for the people of South Australia. They simply sat back on their hands and goaded this company into leaving the country. Once we lost Holden, what happened next? Toyota said, 'We can't make a go of auto manufacturing in the absence of Holden.' That obviously impacted dramatically on the workers at Toyota. But it had a secondary and just as important impact in South Australia, because a lot of the component manufacturers who provided components for both Holden and Toyota are going to lose their jobs as well. So it had a compounding effect. In areas where there was an opportunity to create some employment or keep jobs in Australia, this government sat on their hands—sat by and watched those jobs disappear.

This motion goes to another area where this government is simply sitting on its hands and not doing anything—the very skilled employment of those in South Australia, and across the rest of the rest of Australia, who work in the shipbuilding industry.

I notice we now have a third South Australian senator; in fact, we have four South Australian senators in the chamber. Why? Because this is a significant issue for South Australia. What is going to happen if this government does what it did for Holden, if it does what it did for Toyota? I see another senator from South Australia shaking his head over there. Can I talk about something that is in Senator Fawcett's area of interest: the Woomera bill? We could have—

Senator Birmingham interjecting

Senator Birmingham, you could have made a—

Photo of Sean EdwardsSean Edwards (SA, Liberal Party) Share this | | Hansard source

Senator Farrell, I remind you to address your remarks through the chair and not across the chamber—as the Deputy President quite rightly reminded me earlier!

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

Thank you, Mr Acting Deputy President. That is a helpful reminder at this point in the debate. I will ensure that I direct my comments through you. I direct my comments, through you, to Senator Birmingham. Let us look at another area in recent times where this government simply sat on its hands—this time in conjunction with the Greens—to block an opportunity for job creation in South Australia. We have seen what has happened with Holden, we have seen what has happened with the component industries related to Holden and we know about some of the problems with Qantas in South Australia. What did we do a couple of weeks ago? We put up a motion in this chamber to allow mining exploration in the Defence area of Woomera. It was not going to cost the federal government a zack—they did not have to commit any money. But what happened? You did not support the motion, which that could have created some jobs into the future—

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

Mr Acting Deputy President, I rise on a point of order on the matter of relevance. Whilst many of the matters Senator Farrell is raising might be worthy of debate, and have at various times been subject to debate in this chamber, the motion before the chair, albeit an extensive and long motion, is exclusively dealing with the Australian shipbuilding industry, and Senator Farrell has thus far struggled to put more than three words together in relation to the Australian shipbuilding industry. I ask you to draw his attention to the motion that he in fact has moved.

Photo of Sean EdwardsSean Edwards (SA, Liberal Party) Share this | | Hansard source

Thank you, Senator Birmingham. There is no point of order. Senator Farrell, I draw you to the motion and the content therein.

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

Thank you, Mr Acting Deputy President. That is a very wise ruling. I know that Senator Birmingham, coming from South Australia, is personally embarrassed by the lack of action on jobs by this government. I have referred to a number of examples of it, but let us talk about the shipbuilding industry; let us talk about its importance to South Australia, and perhaps let us talk about what those South Australian senators on the other side have been doing to try to ensure that shipbuilding continues in South Australia.

We all know the history of the Collins class submarines. They are terrific submarines. They were under criticism by the current Defence minister for a long time. I understand he has now come to his senses on this subject and does appreciate what a terrific submarine the Collins class is and just how important it is to Australia's defence. That began this process of constructing defence maritime ships in this country—and, of course, we want to continue that. As you would know, Mr Acting Deputy President, the Australian Submarine Corporation are responsible for this at the moment. They are currently in the process of building some air warfare destroyers.

I have had the privilege on two or three occasions of going down to Techport and seeing some of these constructions. Those people who have done that—I do not know if any of the Tasmanian senators have had the opportunity to go down there—will know it is fascinating to see the way they construct these air warfare destroyers. They construct them upside down. They build them and do all the work they need to do on the ship while it is upside down, and then, at a certain point, when that construction is completed, they turn it up the correct way and add it to the rest of the ship. Just recently we had the laying-of-the-hull ceremony down at Techport. Unfortunately I was not able to attend, but it was a terrific event.

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

I did.

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

Senator Birmingham said he did. I had a funeral to attend, unfortunately. But I would have loved to have been down there to see it, because what you see at work at that point is all of the issues that relate to shipbuilding and manufacturing coming together: all of the skills of the engineers, all of the skills of the designers, all of the skills of the workers—terrific skills—coming together to construct this ship.

We have another South Australian senator coming into the chamber, in Senator Ruston. They are all getting concerned, of course, because what all of the South Australian senators know is that unless we get some action from the Abbott government—

Government senators interjecting

I know you can't speak, Mr Acting Deputy President Edwards, but I know that if you could speak you would be agreeing with me on this: we need some action from the Abbott government.

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

Mr Acting Deputy President, I rise on a point of order. I think it is an outrageous reflection on the chair for Senator Farrell to be verballing you in that way and suggesting that you would be agreeing with him.

Photo of Sean EdwardsSean Edwards (SA, Liberal Party) Share this | | Hansard source

Thank you. There is no point of order, but I remind Senator Farrell not to infer my thoughts.

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

I can only take it from your actions that you are as deeply concerned about the lack of action of the Abbott government as I am and as the other Labor senators from South Australia are.

Why are we concerned? Firstly because there is no evidence that the Abbott government understands the problems of the shipbuilding industry. They see it as a South Australian issue. We have seen how they treated Holden, we have seen how they treated component manufacturing, we have seen how they have refused to come to the aid of the mining industry to open up Woomera. There is a pattern of behaviour here of lack of concern for manufacturing. Here we have some of the most skilled workers in the country—highly paid but skilled workers—building our ships and improving our national security.

It is important from the point of view of national security. We have seen over the last few days how quickly things can change in a country. Two weeks ago there was no issue in Ukraine. In the last couple of days we have seen a change in government there and we have seen what appears to be a breach of Ukraine's territory by another country. Things can change very quickly, so we need a strong defence industry. The investment in the Collins class submarines started that process. We were continuing it with the air-warfare destroyers. Former Prime Minister Rudd was able to go down to Techport and make an announcement about future projects to keep shipbuilding in this country going.

What do we see with the Abbott government? We see inaction. Nothing is happening. The people in the defence shipbuilding industry in South Australia that I have been speaking with and that have an interest in this are mightily concerned that if this government simply waits for their white paper to deal with this issue, it is going to be too late.

Let us look back over the last few weeks. On 25 February the CEO of BAE, Mr Allott, said that Williamstown in Victoria is under threat and that unless there is some announcement of future shipbuilding they are going to start laying off people next year. On 27 February, Mr Lindsay Stratton, the CEO of Forgacs, said they are going to be laying off 300 people and will be shut by next year.

We simply cannot wait for decisions on this issue. We cannot wait for this government's inaction. We saw their inaction under Holden; we saw their inaction under Toyota and we saw their inaction on Woomera just weeks ago. We cannot afford any more inaction.

What Senator Carr says is, I think, a very thoughtful resolution. What is his answer to this? He calls on the government to immediately do three things. Firstly, fast-track and make public its commitment to a revised time frame for tendering and delivery. This will provide an opportunity for all the companies involved in the manufacture of these terrific ships to come forward with proposals, and I might add that there are a lot of them—there are 1,025 suppliers who, just in this year alone, have provided $126 million worth of business. They have skills training and university courses to ensure that people have the requisite skills. Of course, we also have the Maritime Skills Centre, which contributes to all of these supply companies, ensuring we have the highest skills and best possible manufacturing.

The second thing Senator Carr says we need to do is not wait for the Defence white paper process. We have to have a decision now. We cannot wait.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

Is this a pre-selection speech?

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

No, I have withdrawn from the pre-selection; they are bringing the big guns from Western Australia in here. They are bringing in the Minister for Finance. He is one of the people who could make a decision about this. One of the problems we have in this area is lack of South Australian representation in the cabinet. When there is an issue that involves South Australia there is only one lone voice. Guess who it is. It is Christopher Pyne. He is the lone voice—

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

He is a very good minister. He is an outstanding minister.

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

If he is so good, why has he sat on his hands while the defence industry is coming to this government and saying, 'We need further commitments and projects to keep the defence building going.'

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

You did nothing for six years.

Photo of Sean EdwardsSean Edwards (SA, Liberal Party) Share this | | Hansard source

Ignore the interjections.

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

I am tempted to respond, but I will honour your direction, Acting Deputy President. Our fate in South Australia is solely in the hands of Mr Pyne. If I were a defence worker in South Australia I would be very nervous at this point in time. We saw how he responded to Holden. We saw how he responded to the components industry. We saw how he did not come to the assistance of the mining companies that want to mine in Woomera. I would be very nervous now if I were a Defence worker.

What Senator Carr says in his motion—I will read the last paragraph—is:

… incorporate the long term opportunities for the Australian shipbuilding industry as a strategic priority in all future naval procurement plans.

That is what he is asking for. We need to come forward with projects that will ensure all of the great skills that we have built up over 20 years in this industry and that have given us a sense of national security. As I mentioned before, the circumstances in Ukraine show us just how quickly international circumstances can change overnight. You think you are secure one day, and the next day you find that you do not have that security. The shipbuilding industry does provide us with that security, Mr Acting Deputy President Edwards. I know that you know this, but all of the South Australian senators need to get onto Senator Johnston. He sits right there; you could always grab him just before or just after question time—any time—and say to him, 'We can't sit on our hands. We can't let the shipbuilding industry go the same way that we have seen the manufacturing of cars go, and there is the lack of support for the mining industry.' We have to do something, and we have to do it now. We cannot wait any longer. These companies will start laying off labour. The workers themselves will start saying, 'We have no job security in Australia. We've got all these skills. We've gone to university courses, at Flinders University and the University of Adelaide, as well as the Maritime Skills Centre, but the skills are no good to us because this government is not prepared to commit to the national security of this country. We cannot wait for the white paper. We have to act now.

4:39 pm

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

I rise to address Senator Carr's motion. I commend Senator Farrell for his enthusiasm and commitment to the mining sector in South Australia, but I must say that I deplore that such a serious issue as the South Australian economy or the important issue of shipbuilding, which is an incredibly important part of our national security, should come down to such a cheap exchange of political barbs. I would like to go to some of the issues of substance, but this is at the end of the day a political debate, so I shall start off by rebutting, just like a school debate—which is the level, unfortunately, that such debates often reach in this place—some of the errors and misconceptions that were put forward by Senator Farrell, and then I will talk about some of the more concrete issues that this place, on both sides of the chamber, should be addressing in the interests of our national security and in the interests of the working men and women of South Australia.

Senator Farrell made a number of comments about this government and what it has done to the auto sector. I have stood in this place before, as have other members on this side, and talked about the fact that the demise of Ford, Toyota and Holden has occurred over a number of years—and, in fact, most of those years were under the ALP's government. Mike Devereux, as the GM of Holden, specifically made the comment that GMH was now talking about sovereign risk in relation to Australia because of the back-flipping of the Gillard government over policies. When it came to the fact that they closed their doors, he made the very clear statement that no decision of the Australian government—no amount of cash—would have changed MH's position, because they were in fact closing down factories around the world as part of their consolidation. The Productivity Commission has underpinned that. Steve Bricks has also underpinned that in terms of the volume of cars that have to be produced to make a plant economical. So can we put aside the cheap political barbs and trying to draw from that analogies on this issue of shipbuilding?

This is where I want to finish the political points, just to contrast and compare the actual record of action—not the record of words and promises but the record of action—between the coalition and the ALP. Senator Farrell made great mention about the air warfare destroyer project: the SEA 4000, phase 3. That project was planned, approved and funded by the Howard government, by the coalition government. We have heard a lot of talk about Armadale patrol boats: SEA 1444. Again, that was the coalition government. There was the joint project 2048, phase 4A and the LED. Again, that was the coalition government. So if you want to know which is the side of politics that actually commits to a program—does not just talk about it; does not just have aspirational white papers which it then fails to fund—if you look at the shipbuilding projects around Australia that are occurring today, they are because of decisions of the Howard government, which was seven to eight years ago. I particularly make that point to illustrate the time frame that is required for a venture the size of building a ship between the decision and the commitment of funds and when you have people on a dockyard cutting, welding steel and integrating systems. It does not happen overnight. The things that happen overnight are the defence acquisitions that come from offshore.

While we finish this little political segment, which we seem to have to have in this place, let us contrast the ALP's record. The white paper of 2009 had big dreams: 12 submarines to be built in South Australia and all kinds of equipment promised. Within less than six months, the ALP had started cutting the defence budget to the point where it is now at its lowest level since 1938. Not only did they have to defer those major acquisition projects but they also cut funding out of the running system of the Defence Force. Defence admitted in estimates recently that that has amounted to some $16 billion worth of expenditure which has been deferred, which means contracts they had for building renovations, training, equipment upgrades or maintenance has all had to be deferred. Who suffers from that when those things are deferred? The defence industry does. They are the people who were expecting to be doing the work, and the work has been deferred.

We see on one hand a lack of decision. The C1000 was promised in the 2009 white paper, yet no decision was made for six years. It is interesting that, when you do look at the decisions that were made—and there were some decisions made—those decisions did not necessarily bring advantage to the very people that this motion is about. Let us look at the JP2048 Phase 3 in terms of the amphibious water craft replacement. In September 2011 the then government made a decision on this project. If you go back through the Capability Development Group and the Defence Materiel Organisation's papers it is clear that this was put forward as a project that had every opportunity to be a project that was manufactured and supported in Australia. We are not talking rocket science here. These are the smaller landing craft that will operate to and from the landing helicopter docks, the LHDs, the Canberra class vessels. These are not complex or expensive ships, but they would have provided work—and they could have been providing work right now and over the next two or three years if the then government had decided to do that.

What did the ALP do? They decided that they would send the job to Spain. In relation to those 12 ships—one of the few things that the ALP actually made a decision on and committed money to—did the ALP support Australian dock workers and manufacturing workers? No, they did not. They sent the work to Spain. I am bringing these things forward, in this small part of the to-ing and fro-ing of politics, to highlight the hypocrisy of the ALP in what they are accusing this government of when, on the few occasions they made decisions, they actually sent work in this very field offshore. I challenge members opposite to consider how much of the 'valley of death' would have been avoided if the ALP government had taken a decision to build the landing craft in Australia as opposed to sending them off to Spain. I concur that this is a serious issue, but it is rank hypocrisy for the ALP to say that the problem we face today is a product of the coalition over the last few months.

The broader issues that we should be debating in this place, to make sure that we put in place a framework that will be good for our national security and that will be good for our defence industry, is actually understanding capability development for Defence and how the government, the department and industry should be collaborating to make sure that we have a sustainable and viable capability. I use the word 'capability' advisedly. Defence has a process where they talk about FIC: fundamental inputs to capability. If we want to have an air combat capability, that is more than just the aircraft. You need to have a training system for the people, you need to have a training system for the maintenance folk, you need to have a support system for spare parts, you need to have airfields. You need the whole lot—people, organisations, support, training, equipment and doctrine are all required. One of the missing pieces in that construct is defence industry. Governments of both persuasions over the years have not directed or engaged with Defence to have them consider, as a formal part of their FIC process, defence industry.

We see that manifested by the fact that the so-called industry division within Defence has sat in a number of places, but it does not sit with the Capability Development Group. The Capability Development Group, CDG, are the ones who bring to government, at first pass, not only the strategic requirement for the equipment and what kind of capabilities or characteristics it should have but also advice around the procurement approach—how they should acquire that. Their thinking does not include at this stage, from a long-term perspective, what the industrial, design engineering, design support and manufacturing capabilities are that we as a sovereign nation need to maintain onshore.

Let us not get into the simplistic argument, as often occurs here, where people fold their arms and say, 'We'll never again build jet aircraft in this country. Why are you talking about building things onshore?' There are countless examples where we see the requirement to have competence, particularly in the area of design assurance, design engineering, fabrication, repair, design and enacting repairs in Australia. If we do not have those things we run the risk of more things like the collapse of the amphibious fleet. For those who are not familiar with that, it was because Navy got rid of their engineering capability. It was given to DMO, who outsourced to industry, and there was nobody keeping watch on the quality of what was being delivered or on the ships. That has cost Australia dearly in terms of our ability to respond to natural disasters, our ability to support other ships afloat, and it has cost through the whole RSO process. It is still costing Defence money as we try to rebuild that engineering capability.

So it is important that we map a path forward to maintain in this area of shipbuilding, in the area of aerospace and in the area of electronic warfare the high-end engineering competencies, the high-end manufacturing competencies and the large infrastructure requirements. It is important that Defence map a path forward so that those things remain viable. That does not mean that we do everything. That does not mean that we try to have orphan systems in Australia and not link into global supply chains. But it does mean that, at first pass, the Capability Development Group should have as one of their considerations a fundamental input into that capability, which means the ability to perform that function on behalf of government over the next two to three decades and that they should have an understanding of what skills, competencies and capacities our industry is required to have. If we were doing that, then each time Defence came to government to put before them, at first pass, a strategic need for the piece of equipment, they would also be bringing to government, wrapped up in that proposal, the strategic plan for sustaining those elements of defence industry capability and capacity that we believed were essential to maintaining our sovereignty as a nation.

That goes directly to this issue of shipbuilding and maintaining the shipbuilding industry. If governments of both persuasions in the past had done that, we would not be where we are today. The inaction of the last six years is inexcusable; but it does not stand alone, because the system has had this flaw in it for many years. We do have an opportunity to fix this and move forward. There are ways that we can start to remediate the issues. The C1000 future submarine is a classic case. The Liberal party is committed to South Australia as the place to build those submarines. But are we going to build 12 submarines—as per the 2009 white paper—with either a new or an unproven design that is a complete step up from the current Collins class? That is the current thinking of block replacement for fleets that the public and the media talk about and that Defence put forward to government.

There is a far smarter way. There is a more intelligent way to look at this capability from a long-term perspective. If we are to build critical skills in engineering, marine architecture, design, systems integration, propulsion and manufacturing, then we will take the service life extension program for the Collins class and we will gradually ramp that up to the point where we have mature and well-functioning systems for each of the major systems—whether they be the hotel services, the ship management services, the combat system, the external sensors or things like getting the hull centre of gravity or the propulsion system right. By doing that through the service-life extension program, we reinvigorate the design, the manufacturer, the welders—all of the things that we need to be able to step up that next notch to the C1000. What you would then see is a continuous and seamless workforce and the building of capacity and competence so that we reduce the risk, and therefore the cost, of future projects.

At the moment, shipbuilding is done on a stop-start basis where we have high risk that increases cost. We see people ramping up to try to make production schedules to keep in line with this concept of a time-limited project. If we had a program, the peak numbers would not be as high; but, then again, you would not have the troughs—the valleys of death—either. You would have lower risk and lower cost, and you would iteratively develop your capabilities. If we are talking submarines, then we are talking about a better boat at each iteration of that submarine. We would transition from the extended Collins into the C1000 boat, and many of the systems, and the skill sets of those who are supporting it, would roll across. The benefit is that not only have we reduced the risk and therefore the cost, but also we will have a design with more integrity. This means that the mean time between failures for critical systems such as the propulsion, combat and other systems will be increased.

The flow-on effect is that the availability of boats in the water will be significantly enhanced. The 2009 white paper said 12 boats because this figure was probably based on the current metrics that say if you want one boat in the water you probably need to have two or three to be around world's best practice. So, to have four, five or six boats in the water, they thought you would need 12. But, if you have a design that is more reliable, then your mean time between failures is greater and you understand the systems better, so your full cycle docking times are less. If your upgrade paths are more recurrent and iterative then you will probably find that you never need to build 12 boats in order to have six continuously available in the water. That alone brings efficiencies and savings to the taxpayer as well as operational capability to our Defence Force.

I concur with the intent of Senator Carr's motion to draw attention to the fact that shipbuilding is important. But I highlight the fact that there are long-term considerations that we need to get right as opposed to this short-term, party-political argument that ignores the bigger issues that will set us up to have a sustainable industry that avoids the valley of death. They are the arguments we should be having. They are the things we should be working on more collaboratively to put in place for the benefit of Australia. Regarding Senator Carr's perspective and his position that the government should be deciding right now I highlight yet again that the decisions on the projects that are occurring right now—the air warfare destroyer and the LHD—were taken more than eight years ago. If we had wanted a project to be running next year or the year after—people actually cutting metal, welding or integrating systems—those decisions would have to have been made well before the current government.

There is a way forward. I believe it is the iterative upgrade path with things like the Collins class submarine moving into the C1000. But I would encourage senators in this place to avoid the overt and shallow party-political bickering on an issue that is so important to our national security and to the men and women and the economy of South Australia. This motion is clearly political in nature, which is why this government is not going to support it. But it raises important issues, and I would implore senators from both sides in this place to lift their sights above the grubby party-political bickering on these important issues and to look at the long-term interest of our nation.

4:59 pm

Photo of Alex GallacherAlex 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.

5:19 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party) Share this | | Hansard source

I do not find a lot that I disagree with in this motion, on the shipbuilding industry, moved by Senator Carr. I notice that Senator Carr has moved the motion, perhaps in his role as former industry minister, but has not bothered to turn up for the debate. That suggests that perhaps Senator Carr realises that the parlous state of the shipping industry in Australia at the moment is squarely and fairly on his shoulders and on the shoulders of other people that made up the dysfunctional government of the previous six years.

We recognise the vital contribution the Australian shipbuilding industry makes. We are gravely concerned about the possible retrenchment of skilled workers. We acknowledge the heavy cost of rebuilding lost capabilities. And we have an understanding of what this means to national security. I have no real problem with those elements of the motion, but the last part of the motion is the bobby-dazzler, if I can say that. Senator Carr is calling upon the government to immediately identify suitable project work to be fast-tracked, and recognising that this cannot wait for the defence white paper. As Senator Fawcett pointed out in a very thoughtful speech, these projects need a lead-in time of six to eight to 10 years. These projects are not something you think of today and start building tomorrow. We all know that both the LHD and the AWD proposals were actually initially proposals of the last coalition government. All Labor had to do was implement those decisions. Of course, not only was Labor not able to do that, as is referred to in Audit Report No. 22, referred to in the Financial Review this morning, it sat on its hands and did absolutely nothing for defence procurement, including shipbuilding activities, in the six years it was in government. In fact, Labor's six-year record in defence is highlighted by the defence industry shedding more than 10 per cent of its workforce because of budget cuts and deferrals by the Gillard and Rudd governments. There was a reduction in the overall defence spend as a percentage of GDP that took Australia down to its lowest level of defence spending since 1938—a year before World War II started. That was the effect of Labor's management of our defence forces.

I heard Senator Gallacher saying there are no ministers to look after South Australia. I am not sure what his point was, because Christopher Pyne is a very significant member of this government, one of the senior ministers, and he has done more for South Australia in the few months of the Abbott government than all Labor ministers did in the previous six years. Senator Wong was supposedly a very senior minister from South Australia, but what did she do about looking after the shipbuilding industry in South Australia? I would be very interested to hear that, because clearly the shipbuilding industry in South Australia and Western Australia—everywhere—is in decline because the previous government, in the six years that it should have been making forward plans, did absolutely nothing. The decisions of the Rudd-Gillard-Rudd government led to around 100 projects being delayed, 40 projects being reduced and 11 projects being cancelled. Many if not all of these would have included important roles for Australian industry. Under Labor, we saw more than $18 billion cut from the defence budget for the next decade or so.

I would like to take 20 minutes to speak on this, as the previous two Labor speakers have done, but I am going to curtail my remarks because I do want to give the opportunity to Senator Back and Senator Edwards, who come from the big shipbuilding states of South Australia and Western Australia, to speak in this debate. However, I suspect Labor will again try to filibuster so that the real facts about Labor's inefficiency and incompetence in managing the defence budget cannot be exposed. I encourage people to read the report in this morning's Australian Financial Reviewwhich shows that the air warfare destroyer budget blew out by $10 million a month under Labor's watch.

Before I conclude I want to demonstrate Labor's hypocrisy when it comes to defence shipbuilding. I remind senators—some of the newer senators may not be aware of this—that years ago there was a very viable, substantial, professional and skilled shipbuilding industry in the northern city of Cairns. It made a substantial contribution to the local economy, employing many skilled workers, many tradesmen, many apprentices and many workers in that field. What happened to that industry? I will tell you what happened—NQEA, the Cairns shipbuilder, bid for the one of the modules of the Australian air warfare destroyer project. I understand they were well in line to get that work but, on the eve of a decision being made, the Queensland Labor government withdrew not financial support but the promise of a backing guarantee. That is all that was required—not money. The Queensland Labor government withdrew that guarantee, which meant that NQEA was not given that project and that was the death of a long-established shipbuilding industry in Cairns—a shipbuilding industry which I proudly say Malcolm Fraser, as a Liberal Prime Minister of Australia, supported with the construction of our early patrol boats. The Labor Party, rather than criticising others about the jobs of workers, needs to look at their own backyard. They need to look at what the Queensland Labor government did that shut down that industry and threw so many workers onto the unemployment scrap heap. As I say, I will curtail my remarks in hope that my colleagues from the shipbuilding states get an opportunity to speak in this important debate.

5:27 pm

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | | Hansard source

I also listened carefully to Senator Fawcett's contribution and I am glad that I heard it because, even though I did not agree with everything that he said, it was a thoughtful contribution. There is no doubt about that. I would disagree with some of the emphasis and some of his conclusions, but he put a big effort into bringing forward what he thought were the key issues affecting these significant defence spending problems—problems that any government in any country would face.

I also listened carefully to Senator MacDonald, who said that we were in here to filibuster. If there was anyone filibustering, it was Senator MacDonald. If there was ever a demonstration of naked politics winning over thoughtful contribution, then Senator MacDonald was the epitome of that process. The last time Senator MacDonald would have seen a ship—he talks about his Scottish heritage—it would have had a big dragon on the front, when the Vikings were invading Scotland. That is about the level of his understanding of the shipbuilding industry. Based on his contribution, his understanding assumes dragons on the front of the ship, Vikings inside and oars all along the side.

Let us go back to some of the more thoughtful contributions—and I do not want to get dragged into Senator Macdonald's obvious filibuster and his naked political attack on the former government. Every government has problems dealing with projects that are eight times the size of the Snowy Mountains project. That is the size and scope of this project. The technology in these Defence projects leaves the Snowy Mountains for dead in terms of the technology and sophistication of the projects. Successive governments have accepted that building the DDGs in Australia would involve a premium over and above the cost of building them overseas. Why do governments do that? Would the United States allow their shipbuilding industry to be farmed out or contracted out to any other country? No, they would not. If fact, even if you do any small componentry work for the United States defence department, you do that on extremely strict approaches, guidelines and requirements.

I am very concerned—despite the coalition's thoughtful contribution from Senator Fawcett—that, given the leak into the Financial Reviewthis morning prior to the release of the Air Warfare Destroyer Program Audit Office analysis, there is a whale in the bay. The whale in the bay I am worried about is that people will try to use this report, along with another privately determined report that the government is arguing they are going to do, to try and send the work for future warship projects overseas. I really do not want that to happen.

Prior to my discussions, I decided that, given the arguments that have been put up here in relation to other areas of endeavour in this country—manufacturing projects around the place, the Toyota close-down, the problems that the government argues are in other areas—I thought I had better ring the AMWU and ask them about their involvement in this project in South Australia. I am a former national secretary of the AMWU. I spoke to the assistant secretary about half an hour ago, and he indicates to me that almost $100 million has been spent simply on skilling workers up to do this work. That is the scale of this project, about $100 million in training—and that is not just for blue collar workers. That is not just for the welders, the riggers or the technicians—that would be for the management and executive, what falls within the Defence capability that we have within this project.

I have not had an opportunity to have a look at the recommendations. I have not even read the summary of the Australian National Audit Office report

Suffice it to say that, in what I have had a quick look at, the issue of workers' wages and conditions does not seem to be jumping out at me in relation to this. That is consistent with what the Assistant National Secretary of the AMWU, Mr Glenn Thompson, has advised me. He says that there have been no industrial disputes of any significance in this project. Management do not argue that there have been industrial problems at the project. Management do not blame the workforce, as some management are likely to do in some places, for the fact that there is a problem in the project in South Australia.

But this goes wider than South Australia. It also goes to the Forgacs Shipyard in Tomago in Newcastle, a workplace that I know well, and also the Williamstown shipyard, again a place I know well. In my time as national secretary of the union, I have been on all these shipyards looking at what has been done and, quite frankly, marvelling at how skills have moved on since I worked in the ship repair industry at Garden Island Dockyard in New South Wales in the early seventies. These are technological marvels that we are building, and we need to make sure, for a number of reasons, that we can continue to build sophisticated warships and defence capabilities in this country.

As I said, I have not read the National Audit Office report but I know you can go back to some basic principles in terms of how projects operate. You look at the costs in the project, and I do not have any problem looking at costs, but many establishments look at the costs and that is all they do. You have to look at the quality of the product that you deliver, the quality of the training on the job and the quality of the actual delivery of the skills on the job. You have to look at how we deliver on time, and that has been a problem in this project. You have to look at the training; as I have indicated, $100 million has been spent on training on this project to build a new, sophisticated shipbuilding workforce in this country. You have to look at the logistics. How do you get things here in time? How do you do all those things? And I am sure that in the Audit Office report they have some comment on that. You cannot ignore the work organisation, how the work is organised on the job. And you cannot ignore the management systems that are put in place to manage. But a project as complex as this project, and a project as complex as most defence projects, takes highly-skilled management and takes knowledge—that knowledge being worked through out onto the job and into the workplace to deliver a quality outcome on time, on course and at the quality that is needed.

So this is a huge project. I am not sure why this was leaked, because obviously it was leaked yesterday. There would not have been too many people who had a copy of the Audit Office report. I can be pretty confident that it is not the Audit Office that leaked the report. There is no reason why they would want to leak the report, so you would have to say that it has been leaked from elsewhere. The AMWU and the shipbuilding unions do not have a copy of the report. The Department of Defence would probably have a copy and the minister would have a copy. I am not sure where it has been leaked from.

In my view, it is all about setting this argument that there are cost overruns—and I defy anyone to point to any major defence project anywhere in the world where you do not get cost overruns. I have never seen any. I have just seen all the arguments everywhere else, in the press and in some of the industry literature, that talk about the problems of bringing some of these projects in on time. You only have to look at what happened with some of our aircraft projects that are being built both here and overseas, and look at the cost blow-outs overseas on these issues.

This is not a defence to say that you simply cannot have any cost overruns on these projects whatsoever. That is why I say you have to have the cost under control; you have to have the quality; you have to have the delivery; you have to have the management systems; you have to have the work organisation on the job; and you have to have the skills, the training and the research and development. These are the things that go together to make a successful project. And even when you pull all of these things together, sometimes things outside your control mean that you cannot deliver on time and on budget.

That is the reality, and I would just counsel my colleagues on the other side of the chamber that when they make a speech about this now that people can go back to that speech in a few years time and see what has been said. And when you make a speech on this you have to understand the complexity of these projects. There is no magic wand, no silver bullet, that the coalition can pull out of the back of their pockets because they will get some policy issue that says, 'We're going to do something on shipbuilding. It will be a tough management approach on building any of the new projects that we have.'

The big issue that we are faced with is that, regardless of all the arguments you could put forward, like Senator Macdonald did, and all the duck-shoving and all the blame-shifting that you do—you can do all that—the problem that we have at the moment is that we want to keep workers in the industry. We want to keep the skills in the industry and we want decent South Australian workers to have a capacity to go and help build our defence capabilities, and we want them to have decent wages, decent conditions and some security that the skills that they have learned over this period of time can be applied in the future to help them and their families to thrive—and to help the South Australian economy thrive.

It is the same as in Newcastle. The same issues apply in Newcastle. This skills are there; we need to keep those skills. The same applies at the Williamstown Dockyard. And you can blame the Labor Party all you like, but it is now time for the coalition to govern. And the coalition needs to govern on the basis of dealing with this so-called 'valley of death'; these hundreds of millions of dollars that have been spent skilling up the workforce at Williamstown, in South Australia and in Newcastle—that all that skill is not lost to the country.

A few weeks ago I was given a copy of a report by the AMWU, and I would recommend that the coalition senators have a look at it. It is a well-designed and well-thought-through argument about what should be done. It is called Design, build and maintain our ships here. I am glad that we have maintained our ships here, because when I first came to Australia in the early seventies I worked for over 12 months at Garden Island Dockyard maintaining the DDGs that were there at that time. I worked on the Kembla, which was an old wooden-hulled ship which had been a minesweeper. I worked on the Melbourne and I worked on a range of ships there. It kept me in work, it kept me with an income and it helped the defence of this country by having skilled people working in Garden Island and maintaining our defence capability. They were highly skilled, well-paid and committed people.

What we have at the moment is, if you look at the document that the AMWU has put out—and I recommend that other senators have a look at page 15 of the document—it clearly outlines what is happening in terms of the workloads in Defence. And the workload has started to dip massively, and unless there is something put into this valley of dipping jobs then we are going to end up losing many of those skilled workers—4,000 highly-skilled workers in the industry will be lost. And whether those skills can ever be brought back into the industry is going to be a moot point.

But what we are foreseeing is that in the future through from about 2019 to 2036, with some long-term planning, these workers' jobs can be secured. In fact, what the AMWU report is saying is that if the workload and the skills capacity for a lot of this work comes into Australia, we could keep a workforce of between 5,000 and 6,000 employed for over a decade in the shipbuilding industry—maintaining our own ships, building our ships, building the skills and making sure that we understand the problems that are outlined in the Australian National Audit Office report. We need to make sure that we deal with those issues and that we build a strong, skilled workforce.

I fully support what Senator Carr was saying. I do not know what the point was of launching an attack on Senator Carr when he wants to look after, and help, Australian workers. I do not think attacking Senator Carr helps when we have such a serious situation. The AMWU has 10 recommendations in this area. They have had a look at this because their members' jobs and their members' families depend on it. They say:

1. The Australian Government should build more Air Warfare Destroyers to immediately help preserve national shipbuilding skills and capacity …

I will shorthand these because I do not want to run out of time. The recommendations continue:

2. The Australian Government should bring forward the project to replace the Armidale Class Patrol Boats to help develop Australia’s capability to design and build patrol boats.

3. The Australian Government should bring forward the project to replace HMAS Success and HMAS Sirius, and build the ships in Australia.

These recommendations are all designed to overcome that 'valley of death' and keep skilled people employed. The recommendations continue:

4. The Australian Government should require all shipbuilding contracts to specify a level of block fabrication outsourcing appropriate to the type and number of ships required.

5. The Australian Government should build Australia’s new multipurpose icebreaker in Australia.

6. The Australian Government should continue to support apprenticeship and other shipbuilding training programs, including requiring these schemes in all Australian Government shipbuilding projects.

7. The Australian Government should expand the role of the current Defence Expert Industry Panel to encompass Government’s non-Defence shipbuilding projects and include members from associated Departments.

8. The Minister for Industry should convene an annual meeting of Ministers responsible for shipbuilding programs to review and provide direction to coordinated, long-term Government shipbuilding plans.

9. The Australian Government should direct that the future frigate project be established as a rolling build program for the Navy’s future surface combatant fleet …

We need a skilled shipbuilding workforce in this country. We need it for our defence capabilities. We cannot rely totally and consistently on off-the-shelf ships brought in from overseas. If we bring them in from overseas we will save some money in the short term and we will trash $100 million worth of training for workers in South Australia and around the country in the long term. That would be an absolute disaster.

We need to understand that there is a 'valley of death'. We need to understand that something has to be done. There is no use making recriminations against the previous government, because we have the problem now. The coalition are in government; the coalition can do something about this. With some cross-party support for the shipbuilding industry we can go in and argue that these jobs should stay. I would welcome an opportunity to go with any of the coalition senators to talk to the minister and argue for the protection of jobs. It should be a cross-party position; it should be non-partisan. We should support our shipbuilding industry.

5:47 pm

Photo of Sean EdwardsSean Edwards (SA, Liberal Party) Share this | | Hansard source

I wish to speak on Senator Carr's motion before the Senate. I applaud Senator Carr for bringing this to the chamber so that we can talk about it. It is a very important issue. It is certainly a very important issue for South Australians. There may be some listening to the broadcast as they drive home. I want to speak about it broadly, for anyone out there who is interested. This is a motion that has been brought onto the floor of the Senate this evening. It makes motherhood statements, really, about the vital contribution of the Australian shipbuilding industry. We all know about that. We all understand that. It is a pity, Senator Cameron, that you are not staying to listen to my contribution; I was going to agree with a number of things—but I will see you next week.

Senator Carr raises a number of issues. He says that he is gravely concerned about the scheduled end of work projects in the three Australian shipyards in 2015, and the severe consequences: the project trough and the retrenchment of workers. This motion is, as my South Australian Senate colleagues have said earlier in this debate, just a political ploy. In the areas of shipbuilding and the defence forces, the budgets go out for many, many years. We know the importance of planning and budgeting for these projects. For many years there has not been good budgeting for these projects; nor has money been made available for these projects.

I know there is a shrill lament coming from the other side of the chamber about what could have been. Opposition senators say, 'You're the government now so stop talking about it.' But to put it in basic terms, when we won the election, we went to the cupboard and the cupboard was bare. The declining revenue for the Australian Defence Force over many years has meant that this valley of death was looming large for the Australian Labor Party, and it now looms large for the coalition.

However, in our DNA we understand that you have to make savings. You have to get rid of duplication and ensure that everything is running efficiently in your government so that you can apply and prioritise funds so that the valley of death does not eventuate. I say to those listening to my contribution tonight that there is a plan. There is a plan to protect jobs in South Australia, where I come from. It is a good plan. Minister Johnston spends a lot of time in South Australia and is absolutely passionate about maintaining the integrity of the Defence budget and ensuring that shipbuilding continues to play a major role in all those shipbuilding centres.

As a South Australian senator I know first-hand how important it is to get right the decisions that governments make in the defence space. South Australia is home to state-of-the-art facilities at Techport in Osborne near Port Adelaide

I recently had the pleasure—and it was a great pleasure indeed—and was so proud to be with the Minister for Defence and my colleagues from all political persuasions in South Australia at the keel-laying ceremony for the HMAS Brisbane at the Techport facility. And I was there with thousands of workers in their high-vis uniforms. I enjoyed a tour of the HMAS Brisbane and enjoyed seeing the photographic historical record of its various incarnations of construction to date. Over $300 million in state owned infrastructure at Techport is deployed to develop a world-class maritime industrial precinct. The facility will support the ASC to deliver the Royal Australian Navy's next-generation $8 billion air warfare destroyers—the AWDs, as we know them here—and it will attract future naval shipbuilding and repair opportunities to the state of South Australia.

I may be somewhat cynical, Senator Heffernan, who joins us here to listen to this contribution, but with a state election in South Australia pending this motion is clearly stating the obvious. Of course we want shipbuilding. Of course we want as much of our Defence building done in Australia as possible. We do not want to outsource it, as the previous government did, and then have cost blow-outs. We want to be able to monitor and nurture all of these trades in all of the shipbuilding facilities that we have around this country.

I was just talking about Techport, Senator Heffernan, down there in Port Adelaide. This state-of-the-art project management, engineering and commercial headquarters of the AWD project houses all of its alliance partners, the Defence Materiel Organisation and, as a shipbuilder, the Hobart-class combat systems engineer. Also down there as a provider to Defence is Raytheon Australia, and that whole precinct has build-capability partners, including the likes of Navantia, even the United States Navy, and Lockheed Martin Corp. There is a very, very big investment in this indeed. So it cannot fail. We must focus on it. It is a high-tech hub where about 400 expert naval architects, project managers, combat systems engineers, logistics teams, planners and procurement specialists are working together to deliver the most powerful and advanced warship Australia has ever operated.

The government is aware of the issues faced by Australia's major shipyards, and the future completion of the AWG and LHD projects will follow. Under the previous government, the Australian defence industry shed more than 10 per cent of its workforce because of budget cuts, and I talked about those earlier. When we were not in government, we raised that with you and it fell on deaf ears. The deferrals, the official procrastination and the tendency to commission foreign suppliers over Australian ones were almost palpable. In fact, the share of GDP spent on defence has fallen to its lowest level since 1938, and that was under your government, the Labor government.

This government is committed, if you will excuse the pun, to steadying the ship in Defence. After six years of chaotic planning and cuts to the Defence budget, this government wants to avoid production troughs by cooperating closely with these companies—the ones I mentioned—big and small. We want to provide the consistency, the continuity and a long-term focus on defence capability—and we heard earlier about that from Senator Fawcett. A new defence white paper has been structured to be more successful than those that were commissioned and jettisoned and then commissioned again by the previous government. Once we release it, it will give us an authoritative guidance to defence and provide a logical and sustainable basis for investment and procurement decisions, as well as a properly funded 10-year defence capability plan.

The naval shipbuilding industry is facing a significant downturn in demand in the very near future. We are aware of that. Approximately 4,000 employees work in naval shipbuilding in Australia, and on current planning the work for these employees will reduce dramatically from early 2015, not 12 months away. So we have to get cracking. Notably, the ASC in Adelaide employs approximately 1,200 workers on the air warfare destroyer construction program, where work is expected to reduce in early 2015, to be complete by mid-2019. BAE Systems in Melbourne employs approximately 1,000 staff on the AWD and landing helicopter decks—or the LHD, as they are known here—programs, where construction is expected to be complete around mid-2015.

Because of the six years of total inaction on the part of the previous government, we are now facing a crisis in naval shipbuilding. I am not getting too many interjections from the other side because they know it to be true. How many contracts for ships to be built were signed under Labor's reign of six years? No? It is a rhetorical question, but, Mr Acting Deputy President—I have to address the chamber through you and not those on the other side directly—it would be a very interesting answer if I were able to address them. But you will have to convey the question for me. The Labor government's solution was to delay projects and push out the costs to a future date, and now it is our problem. By way of example, they twice extended the time lines for construction of the three ships in the AWD project. The net result was that the delivery dates—

Photo of Stephen ParryStephen Parry (Tasmania, Liberal Party) Share this | | Hansard source

Order! The time for the debate has now expired.