Senate debates

Wednesday, 19 August 2015


Omnibus Repeal Day (Spring 2014) Bill 2014; Consideration of House of Representatives Message

9:48 am

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Minister for Employment) Share this | | Hansard source

I move:

That the committee does not insist on its amendments to which the House has disagreed.

Photo of Stephen ConroyStephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

I ask that the question be divided in respect of the amendments. Could I suggest that the Senate considers amendments (1) to (6) together, with amendment (7) taken separately. I foreshadow that I will have an amendment to move in relation to amendment (7).

The TEMPORARY CHAIRMAN: The House has not agreed to the seven amendments that we have in front of us. Senator Conroy has asked that the question be divided on amendments (1) to (6), so the question is:

That the committee not insist on amendments (1) to (6).

9:50 am

Photo of Larissa WatersLarissa Waters (Queensland, Australian Greens) Share this | | Hansard source

I seek some clarification, and, obviously, I would like to insist on (1) to (6) being maintained. I want to ask if this about the substance of those amendments or about Senator Conroy's motion to split (1) to (6) off from (7), in which case we do not object.

The TEMPORARY CHAIRMAN: It is the substance of the amendments.

I am not speaking on the issue of whether or not to separate the amendments from the opposition's amendment, which I presume we will come back to at some point.

The Greens are moving these amendments because we believe that science has a very crucial role in the process of decision making, and our amendments go to the retention of two advisory bodies that the government really should avail itself of. They are the Product Stewardship Advisory Group and the Oil Stewardship Advisory Council.

We are seeing, time and time again, that this government has absolutely no respect for science. It has been cutting workers from the environment department and slashing funding from community groups. It now wants to silence community groups from even enforcing the government's own environmental laws, so this is just another attack in a long line of attacks against science and good sense.

The two advisory groups to which I referred are crucial bodies that provide the government with, effectively, free advice on how not to stuff up the planet. Why this government wants to abolish them is beyond me. The Product Stewardship Advisory Group has been constituted and has been functioning very well, and we are told by members of that group as well as community members that the government does not have that in-house expertise. It needs these advisory groups to give it decent information about product stewardship and about waste oil recycling. These amendments are simply a wanton refusal to accept expert advice. These bodies do not cost a lot to retain. This is, effectively, free expert advice to the government. I do not understand why they are trying to get rid of free expert advice. The only explanation is that they would rather not know so that they can take decisions which damage the environment and attempt to do so with impunity. So we will be insisting that these amendments, (1) to (6) on sheet 7642 be insisted upon by the Senate.

Photo of Stephen ConroyStephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

I indicate, on behalf of the opposition, that we support the continuing inclusion of the amendments. So we will be voting no to the resolution that we are not insisting—because this is a negative one, isn't it? It effectively works as a negative.

Photo of Sue LinesSue Lines (WA, Australian Labor Party) Share this | | Hansard source

As I understand it, the question before the chair is that the committee not insist on amendments (1) to (6).

Photo of Stephen ConroyStephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

We will be opposing that resolution—to continue to support those amendments.

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Minister for Employment) Share this | | Hansard source

The government will oppose the amendments. This omnibus bill is part and parcel of the government's determination to reduce red tape and extra costs, which are prejudicing the capacity of the Australian economy to grow and create jobs. In a situation where we are running a huge deficit and debt that will hang around the neck of the next generation like an economic millstone, we have a duty to ensure we do everything to drive the economy in a manner that will change that debt and deficit disaster and allow jobs to grow. If jobs grow, we know that we might be able to remove the six from in front of the unemployment figure.

It was interesting to listen to Senator Waters, and this was typical Green-speak. She said, 'It doesn't cost much' and then moved on to say 'free advice'. It either costs or it is free. You cannot have it both ways, and this is why the budget is in the mess it is—because of the former Greens-Labor government pretending they could do things without a cost to the Australian people. What they did was to run up deficits and run up debt, which we now have to confront, which we now have to rein back in and which we have to pay back. It is interesting that the architects of this debt and deficit disaster are retaining their position to ensure that the fireman who was called in to put out the fire—namely, the coalition—is being stopped at the door from doing the duty that the Australian people elected it to undertake, and that is to restore the economy. We promised the Australian people that we would seek to remove red tape and do it in a manner that would help the economy cut the debt and deficit disaster and create jobs. That is what motivates us, that is what continues to motivate us, and I would encourage the Senate to not insist on these amendments so that we can get on with the business of creating the wealth and jobs for the future.

The CHAIRMAN: The question is that the committee not insist on amendments (1) to (6) with which the House has disagreed.

The CHAIRMAN: The question now is that the committee not insist on amendment (7) with which the House has disagreed.

10:03 am

Photo of Stephen ConroyStephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

I move the following amendment in place of amendment (7):

(1) Page 25 (after line 29), after Schedule 3, insert:

Schedule 3A—Finance

Public Governance, Performance and Accountability Act 2013

1 At the end of Division 2 of Part 4 -1A


105BA Future submarine project tender process

(1) This section applies if the Commonwealth (including a Minister on behalf of the Commonwealth) proposes to enter into a contract (a submarine design and building contract) for the design and building of a submarine, or a substantial part of a submarine, as part of the future submarine project.

Note 1: The future submarine project is designated SEA 1000 in the Defence Capability Plan as in force on 1 December 2014.

Note 2: This section does not apply to contracts for research, concept or preliminary design, planning or other preparatory work that does not involve the building of a submarine or a substantial part of a submarine.

(2) The submarine design and building contract must not be entered into other than as the result of a limited tender process conducted in accordance with the Defence Procurement Policy Manual as in force on 1 December 2014, subject to this section.

Tender process

(3) The future submarine project is taken not to be an exempt procurement for the purposes of the Defence Procurement Policy Manual.

(4) A person or body is not eligible to bid for the tender unless the person or body gives the Commonwealth an undertaking that the submarine building, maintenance and sustainment will take place in Australia.

(5) The Commonwealth must not enter into a submarine design and building contract in relation to the future submarine project unless the Commonwealth is satisfied that the contract includes guarantees that:

  (a) the majority of work on the submarine build will be undertaken by Australian labour; and

  (b) the majority of the materials used in the submarine build will be sourced from Australian suppliers.

(6) This section ceases to have effect at the end of 30 June 2020.

This amendment is necessary, because much has changed in respect of the future submarine project since the Senate first passed amendment (7).

This revised amendment removes several of the procedural stipulations contained in the original, and replaces them with two simple requirements: (1) that our future submarines are built, maintained and sustained here in Australia; and (2) that both the majority of work and materials for the submarines are Australian-sourced.

It is unfortunate that it is necessary to move such an amendment to ensure that the Australian government does the right thing by Australia, that it does the right thing by Australian taxpayers, that it does the right thing by the Australian Defence Force, and that it does the right thing by Australian companies and Australian workers. It is unfortunate, but it is necessary.

It is necessary because much has changed since the Senate passed the original amendment. But one thing remains the same: Mr Abbott's unwavering desire to send our future submarines offshore; Mr Abbott's desire to keep his promise to the Japanese Prime Minister and to break his solemn election promise to the people of South Australia.

We have witnessed a litany of outrageous decisions and statements by the government and the Prime Minister that have put at risk our vital naval shipbuilding capacity, decisions that have resulted in over 1,000—let me repeat that: over 1,000—Australian jobs lost at shipwrights around the country, all on Mr Abbott's watch.

Who could forget Mr Abbott's decision to walk away from his government's pre-election promise to build 12 submarines in South Australia? Or Mr Abbott's decision to make a secret deal with Japanese Prime Minister Abe to send our submarine construction offshore to Japan, where the Japanese will have to build an entire new shipyard. But even then, that was not enough! Mr Abbott decided to exclude—to actually, specifically and legally exclude—Australia's shipyards and Australian workers from tendering for Navy's new supply ships.

As if that were not enough, Mr Abbott had a another surprise up his sleeve for Australian shipbuilders—another insult to add to the injuries that he and his government had already inflicted on this industry and its highly-skilled workers. In February of this year, during the height of the Liberal leadership tensions, Mr Abbott invented a sham competitive evaluation process for the future submarines. He did this for one, simple reason. It was not because it was a result in better, more capable submarines for our defence forces. It was not because it would result in a cheaper, more cost-effective submarine force for Australian taxpayers. And it was certainly not because he gave a damn about the future of this strategically-vital industry and its workers. No, he did it for one simple, selfish and shameful reason: to save his own job. He needed Senator Edwards' vote to save his prime ministership, so he concocted a sham process. It was a sham process to appease Senator Edwards and to win his support in a leadership ballot. It was a sham process that his own defence minister could not explain at a public press conference.

It was a sham process devised without any formal written advice from the defence department. Let me repeat that: it was a process for a procurement of a $50 billion overall contract without a single note, word of advice or submission from the Department of Defence—not a word. And it was a sham process that will not—and I want to stress this; it will not—deliver three comparable bids with fixed prices and fixed schedules. It was a sham process where, as Senator Xenophon discovered, even if you win the process your bid can still be declined due to so-called 'broader strategic considerations'.

It was a sham process that meant that Mr Abbott can still fulfil his promise to Japanese Prime Minister Abe and ensure his captain's pick of sending our submarines overseas. These 'captain's picks' are now becoming a familiar albatross around the Prime Minister's neck. We have seen what happens when the Prime Minister makes one of his dud captain's picks. He promised a gold-plated, Rolls-Royce, paid parental leave scheme that made no sense and which almost his entire party opposed—but he said it was a captain's pick. He brought back knights and dames in a bizarre throwback to a previous era that most Australians cannot remember and do not relate to. He chose Ms Bronwyn Bishop as Speaker.

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Minister for Employment) Share this | | Hansard source

Tell us about Peter Slipper!

Photo of Stephen ConroyStephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

Yes, exactly. And he knighted Prince Philip. All of these were captain's picks. But they are not the worst. That litany of captain's picks is not the worst of his captain's picks. Senator Bernardi from South Australia, stop sneaking out of the room to go and use your new NBN connection! Come back in here and vote for South Australian jobs!

So, here we are today with a sham process and the worst captain's pick of them all. This is a project valued at up to $50 billion that is crucial to the defence of our nation for decades to come, and upon which the livelihoods of thousands of hardworking Australians depend. And while Mr Abbott seems content to just throw billions of dollars and thousands of Australian jobs away, in this place we cannot allow this to happen. We know, based on testimony from Australian officials, that the Department of Defence did not provide advice on this process. We know that it was concocted by the Prime Minister and his staff, not our defence procurement experts. We know, thanks to the honesty of Australian officials, that Japan's involvement in this process is 'based on political considerations, not merit'. That is because Mr Abbott needed a way to ensure that Japan was included in this sham process. We know from Australian officials that this process—it is quite extraordinary for a process for a $50 billion project!—will not result in comparable bids with fixed prices and fixed time lines. That is because this process is a political fix designed in a panic by the Prime Minister, the Minister for Defence and their staff to solve Mr Abbott's political problem. We know, based on testimony from officials at Senate estimates in June, that the recommendations at the end of this sham process will be reconciled with 'broader strategic considerations'. That is because Tony Abbott needed a way to keep his word to Prime Minister Abe—

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Minister for Employment) Share this | | Hansard source

Mr Abbott, to you.

Photo of Stephen ConroyStephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

I am sorry—Mr Abbott—even if Japan's bid is not the strongest of the three. We also found out recently that the Australian government has assigned, full time, a staff member in our embassy in Japan to hold the Japanese government's hand to help them submit a compliant bid. That is an extraordinary situation to be in. The French do not need that help, the Germans do not need that help, but the Australian government, to help out Mr Abbott's captain's pick, have got a full-time person assigned in our embassy in Japan to help the Japanese put in a complying bid. What a shambles!

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party) Share this | | Hansard source

What have you got against the Japanese?

Photo of Stephen ConroyStephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

Nothing at all. If they win—if their bid to build in Australia wins—I will celebrate! I will celebrate!

Let no-one make a mistake on this: the leading industry experts have said that it is cheaper to build, maintain and sustain our future submarines here in Australia. This is what Australia's leading industry expert, Dr John White—and I would remind you, Senators, that Dr White is now heading up the German consortium's bid as part of Mr Abbott's sham process—told the Senate Economics References Committee hearing on 22 July:

I am sure that if we truly analyse all aspects of the project we will have a lower cost to the government from an all-build in Australia …

It does not come more devastating than that statement from one of the bidders. Build, maintain and sustain in Australia and it will be cheaper than sending it overseas to Germany, France or Japan. A bidder says it will be cheaper—not a Prime Minister, trying to concoct a reason to save his job and to deliver on his promise to the Prime Minister of Japan. We know that the sham process is not about saving Australian taxpayers' dollars. We know from the same experts that the only way to ensure that we have a viable naval shipbuilding capability is to build both the future frigates and the future submarines here in Australia. This is what Dr White also said:

… if Australia wants to have a long-term, sustainable, competitive, world-class naval industry, we need to plan to build both future frigates and future submarines in this country.

The road map is there. It is cheaper. If we want a world-class submarine and naval shipbuilding industry, we need to build it all here.

Just two weeks ago we saw the Prime Minister and a coterie of ministers making a range of naval shipbuilding announcements in South Australia. While the government's decision to build the future frigates in Australia is welcome, Mr Abbott laid bare the hypocrisy at the heart of his sham submarine process. When asked why the future frigates should be built in Australia—and this government has mandated that they be built in Australia—Mr Abbott finally admitted what Labor has said all along. This is what he said:

… there are significant benefits that flow from a domestic build.

Let me repeat that: there are significant benefits from building naval vessels in Australia. That is what Mr Abbott says, to which we applaud! But the hypocrisy is breathtaking. What is good for our future frigates is apparently not good for our future submarines—despite the fact that the expert advice is that we also need to build the future submarines here to enable a viable local industry and despite the fact that the experts tell us that it is cheaper to build, maintain and sustain our future subs in Australia. The explanation for this hypocrisy is simple: Tony Abbott's sham submarine process was never based on facts or merit. It was designed purely to save Mr Abbott's job during the height of Liberal leadership tensions and to fulfil his worst captain's pick—a very high bar to get over—of sending our future submarines to Japan. We cannot allow Tony Abbott to get away with another disastrous captain's pick. It is not in the interests of our nation, it is not in the interests of our defence forces, it is not in the interests of Australian taxpayers and it is anything but in the interests of Australia's strategically vital shipbuilding industry and its highly skilled workers.

I implore senators in this place not to leave this decision to Mr Abbott; it is simply too important. I implore all senators to join with Labor and support this amendment. Supporting this amendment will ensure that our future submarines are built, maintained and sustained here in Australia. We cannot afford a final captain's pick.

10:20 am

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Could I indicate my strong support for this amendment. I commend Senator Conroy for putting up this amendment. It is a responsible mechanism to ensure that there will be an Australian build of our submarines. This amendment, moved by Senator Conroy, is simply assisting the government to fulfil their pre-election promise that 12 of our future submarines will be built in Australia. It is absolutely critical that this amendment be passed, because it sends a very clear signal, a legislative signal, that there must be an Australian build process. This nonsense, this fantasy of going down the path of having our future submarines built anywhere other than in Australia is absolutely reckless, both in economic terms and in strategic terms. We know of the massive multiplier impact of having our ships, our subs, being built here in Australia and. of the huge flow-on effects on our local economy. We know that a submarine project such as this would involve hundreds of Australian firms, in addition to the principal contractors. And we know that the strategic implications of having our submarines built, maintained and sustained here are absolutely critical if, heaven forbid, there is ever a conflict in years to come. We need to have that capacity here.

Senator Conroy is quite right to point out that Dr John White is a person who is trusted by the coalition government and who co-authored the Winter-White report—Don Winter was a former US secretary of the Navy—on naval shipbuilding. That report has been suppressed by the Australian government, despite Senate resolutions.

I just want to flag now, to let my friends in the government know, that I will be pursuing—including, if necessary, to the Administrative Appeals Tribunal, based on advice I have received in the last 24 hours—the fact that that report needs to be released. It needs to be made public and I cannot fathom how it could reasonably be taken to be cabinet-in-confidence, given some statements that were made at the time by the government that it was going to be released publicly. I think that calling it a cabinet-in-confidence document is itself an abuse of that exemption under freedom of information laws. But let us wait and see what the Information Commissioner and, indeed, the Administrative Appeals Tribunal may determine. I will fight that all the way, because it is in the public interest for that report to be released.

On 22 July, in Adelaide, the Senate Economics References Committee inquiry into the future of Australia's naval shipbuilding industry heard evidence from Dr John White, as Senator Conroy alluded to. Dr White is not only a confidant of the government, trusted by the government to do a report on naval shipbuilding; he was the man who turned around the Anzac frigate project in the 1990s. It was not going well; it was actually turning into a bit of a basket case. John White got in there and managed that project, a world-class shipbuilding project, and delivered those frigates on time and on budget—ships that all Australians can be proud of.

Dr White, in his capacity as chairman of TKMS Australia, said that if you build the submarines here you can maintain them here and sustain them, and the cost to Australian taxpayers will actually be lower overall. It beggars belief that the government is still toying with this concept of a process whereby submarines could be built anywhere other than in Australia.

Can I say that just last month I went to Japan. I want to express my gratitude to Australia's high commissioner in Japan and also to the Japanese Ambassador to Australia for their tremendous assistance in arranging high-level meetings with Kawasaki Heavy Industries, Mitsubishi Heavy Industries, representatives from the Ministry of Defense, representatives from the Ministry of Economy, Trade and Industry where I made it very clear that, from an Australian perspective, particularly from the perspective of my constituents in South Australia and indeed of people around the country, it is absolutely imperative that the submarines be built here. I think that my Japanese hosts got the message loud and clear.

But I am also convinced that the Soryu class submarine, in any iteration, is no doubt a world-class submarine. The Japanese industry and the Japanese government, which I spoke to, indicated that they were ready, willing and able to build submarines here in Australia. That, to me, is a very welcome development. The French and the Germans also build world-class submarines.

This motion—this amendment, rather. It is not a motion; it has much more weight than a motion. I direct these remarks to my crossbench colleagues—for instance Senator Muir, for whom I have enormous regard for his support for Australian industry and Australian manufacturing. To pass this amendment will put some rigour in the process. It will give the government so much less wriggle room to get out of doing what needs to be done, and that is an Australian build of our submarines.

We are already seeing the 'valley of death', where over 1,200 direct jobs have been lost in shipyards in New South Wales, Victoria and South Australia, with many more job losses predicted. We know what has happened in Williamstown. It was completely unnecessary. If you read between the lines of what BAE Systems are saying to Senate inquiries, they just cannot believe that a First World country with a first-tier Navy would even contemplate building supply ships overseas. The answers of Senator Brandis, representing the defence minister, to the questions I asked of him were sadly unsatisfactory, because it does not make sense that, where we are facing a crisis in our naval shipbuilding industry, we would think of exporting $2 billion worth of jobs overseas and not even allowing Australian industry to have a chance to tender for these two naval supply ships or even to be part of a hybrid build where at least hundreds of millions of dollars of shipbuilding activity could take place here. I find it extraordinary that a country with a first-tier Navy would actually exclude Australian manufacturers and shipbuilders from a tender process and that it has to go to either Spain or South Korea. That is outrageous.

That is why this amendment of Senator Conroy's is so important. It has been amended slightly from when it was first put up. This has been done appropriately by Senator Conroy to take into account the competitive evaluation process. It is an appropriate and worthy amendment. We need to support this, because not to support this amendment could well give the federal government the green light to walk away from an Australian build of our future submarines, and the consequences of that to our naval shipbuilding industry, particularly in Williamstown, in Newcastle and in my home state of South Australia, would be to send a very dangerous message to Australian industry that we are not going to go down this path where investment decisions will be made on the basis of whether we have a local build of our future submarines. So I urge my colleagues—my crossbench colleagues particularly—to support this very worthy amendment.

10:28 am

Photo of Scott LudlamScott Ludlam (WA, Australian Greens) Share this | | Hansard source

The debate this morning has largely focused on jobs and the economy, and it is being treated almost as a debate around industry policy—which is worth engaging in, but only up to a point. I will confine my comments largely to what it is that we would need this capability for and whether it is actually going to be fit for purpose for the time in which we imagine that these submarines would be deployed.

I understand perfectly well the reason why Senator Conroy has brought this amendment forward this morning and also why the debate has focused largely on treating defence policy as though it were industry policy. I think that is something of a mistake, but I also recognise that the South Australian economy is in desperate trouble. This came up yesterday, ironically enough, when we were debating Senator Day's amendment on whether we should open the doors to the nuclear industry. With the collapse of automotive manufacturing in South Australia, the decision—which is now well and truly on the record—of BHP not to proceed with the open-cut Olympic Dam operations at Roxby Downs and, indeed, the naval shipbuilding industry, all three of those pillars of the South Australian economy that have been relied on for decades are now called into question. The third one, the naval shipbuilding industry, is one that parliament might actually be in a position to do something about.

We make boots here that we supply our ADF personnel with. We assemble and maintain ASLAVs here in Australia. But we do not design and build our own jet aircraft, and nobody serious in the Defence community really suggests that we should. Somewhere in the middle of that spectrum is naval shipbuilding: should we do it here? Is it the most cost-effective use of taxpayers' money if we are treating it not as industry policy but as defence policy? What is our strategy? What is our doctrine for the defence of Australia? What kinds of capabilities do we put together and assemble to carry out that strategy? Then the third order decision is: from where do we get those capabilities? Do we make those things here? Do we buy them off the shelf? Do we procure things off the shelf and then modify and sustain them here? That is the way these things should be done. What we have here—and it is not entirely this government's fault, in my view, because I would take this back to the 2009 defence white paper—is that process running in reverse. It happened under the previous government and it is happening, albeit in a rather more awkward and shambolic way, under this government. The tail is wagging the dog—industry policy is setting defence procurement objectives from which flow the strategy. In my view, that is precisely the wrong way to be going about it.

Nonetheless, we are an island continent. We depend for the vast majority of our trade on safe access to sea lanes and the law of the sea. It is my view and the view of the Australian Greens that we should maintain a shipbuilding industry here in Australia. The civil shipbuilding industry has been practically wiped out, which really only leaves naval shipbuilding—and we do have those shipyards in South Australia, Victoria and Western Australia. We formed the view, setting aside those questions about what kinds of capabilities we should be putting together, that that industry is important and that it should be maintained—not simply in the construction phase, obviously, but it is a part of what the Australian Greens believe should be a more independent foreign policy and, indeed, a more independent defence policy to be able to maintain our own equipment. There is no real difficulty there.

I want to take us back to the 2009 defence white paper, because it feels to me as though we are dealing here with Senator Conroy's motion, which is something of a blunt object. I presume that will be part of Senator Abetz's point when he gets to his feet shortly. But we are dealing with, in my view, a cascade of very poor decisions that have led us to this point today. With the 2009 defence white paper Prime Minister Rudd, in line with his tendencies to follow grandiose announcements by wandering off and losing interest and getting engaged with something else, announced we were going to have 12 very large submarines that would cost X billion dollars to build and X billion dollars to sustain, and that they would replace Collins. We went through this process of having that decision effectively falling from a trapdoor in the roof into the defence white paper—there will be 12 submarines, we are going to build them here, we will now go through this process of assessing where they should come from. The questions of why 12, why they should have to be so large and such long-range submarines, what role they would perform, what was actually happening, and what was effectively perceived to be occurring in submarine warfare in the 2030s and the 2040s—which is when these vessels would finally put to sea—were effectively just set aside and not spoken of. And everybody knew which way that process would go.

In my role on the Foreign Affairs, Defence and Trade Committee I was involved from the get-go in assessment. The government basically set up four options ranging from a completely off-the-shelf option where submarines would simply be purchased overseas but maintained here in Australia all the way through to a whole Australian build with the installation of the US combat system into them. Effectively, that was dubbed 'the son of Collins'. Everybody who was involved and engaged in that process at the outset through those four different options knew which way the process was going to end—they effectively knew that the United States government would never permit the installation of US combat systems in a German or a French boat. Where it was heading was very obvious from the outset to those involved: we were going to end up with a process of 12 very large conventionally powered submarines built here in Australia, and a lot of the process of assessment around the outside was—I would not go quite so far as to call it a sham, but everybody knew where this process was heading.

Then we came to the 2013 election and then the slow-motion debacle that got underway with Prime Minister Abbott. You could say he was flat out lying—I do not know quite where the President would rule on that—or at least significantly misleading the—I will withdraw that if it is going to cause concern.

The CHAIRMAN: Yes, thank you, Senator Ludlam.

But let us effectively say the Prime Minister was promising the people of South Australia that that is where these boats were going to be built and sustained while actually having no such intention, or maybe simply forgetting that those comments had been made immediately after the election. That set off this desperately politicised process that has come to this point today.

Yes, we need an able shipbuilding industry in Australia, but what kinds of vessels and what role will they be performing? You do not have to look very far through the defence literature to find some very significant concerns about the kind of vessel that is proposed to be built. Why 12? Why so large? Why now? These are the questions that I want to put to you, and the most significant question—about what role these vessels will perform in the very near future—is being significantly undermined. The real risk we are creating here is that these vessels will be obsolete on the day that they put to sea.

A very recent paper by the US Center for Strategic and Budgetary Assessments—they are somewhat independent and are a little outside the formal arms of the US military—proposed that increasing computer processing power opens up the possibility 'to run sophisticated oceanographic models in real time' that will reveal small environmental changes caused by a submarine and that it may be that in the mid-2030s and 2040s it would be suicide to send a large diesel-powered submarine anywhere in the vicinity of a fight, particularly as a crewed vessel, as the kind of submarine capability that we are proposing to build here in Australia here in the mid—

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

You are proposing nuclear, are you?

Photo of Scott LudlamScott Ludlam (WA, Australian Greens) Share this | | Hansard source

I will come to nuclear, Senator Edwards; that is fine. I am sure you will address that in your contribution as well. The point I am making is not actually about propulsion. We could have a well-founded argument—through you, Chair—on whether they should be nuclear- or diesel-powered submarines.

The point I am putting to you is that these gigantic vessels, which are considered to be stealth submarines in 2015, by the mid-2020s, 2030s or 2040s you would not be able to put within hundreds of miles of combat because, by then, it seems increasing likely, as is happening in aviation, this will be the last generation of crewed vessels that put to sea. It will simply be too dangerous to put human beings in the line of fire in vessels such as those we are proposing to spend upwards of $50 billion procuring. So our argument is not necessarily whether or not we maintain a naval shipbuilding industry in Australia but that treating defence policy as industry policy is immensely dangerous. I think you could trace it back to the announcement by Prime Minister Rudd in the 2009 defence white paper—we are going to buy all these things, we are not going to budget for them, there will be 12 and they will be huge and that will be amazing. It overlooks developments and very rapid advancements in two key fields.

One development, as put out in the paper by the CSBA, is increasing computer processing power. The theory is that it may become possible, they say, to construct models that will detect vessels by observing minuscule surface changes caused by their underwater wake. That is about size; it is not about whether it is nuclear powered or conventionally powered. It is about the size of the vessel and the fact that, if you throw enough supercomputer power and enough remote sensing devices at these things, it would make the ocean effectively transparent. That is the theory. Yes, there is an arms race which has been going on probably for decades on detection of these vessels but nonetheless that is something we would want to be absolutely awake to.

Andrew Davies of the Australian Strategic Policy Institute has also noted the extraordinary implications of that spectacular growth of processing power. In 2033, which is at about the time these future submarines will be entering service, electronic devices will be a thousand times more powerful than those we use today and a million times more powerful than those used in 1993. Dr Davies says:

In principle, given enough processing power and enough sources of data, even low power signals can be extracted from background noise. And that’s where Moore’s Law and robots come in. Future processors will be faster and more powerful, and will be able to process large quantities of data fast enough to have a much better detection capability against quiet submarines or low radar signature aircraft. By having multiple sources of radar (or sonar) energy in different locations combined with multiple detectors also in different locations, the trick of reflecting radar away from the original source suddenly becomes much less effective.

Dr Davies' paper does not assume that that is all bad news for submariners but just that the kinds of vessels we build and deploy—if we continue down this road of arms races with other regional powers which, in itself, I suspect may be a grievous misallocation of resources—the boats that were fit for purpose in the 1980s or 1990s, which is what we appear to be about to plunge ahead and build, may well be a decision we significantly regret right at about the time these vessels are proposed to be put to sea.

The other key technological advance which potentially compromises the design of the vessels we are proposing to build is that of uncrewed or unmanned vessels, UUVs, which effectively would see the role of submarines relegated way behind the forward lines or areas in which we expect them to operate at the moment. Dr Davies says that the changes will make sneaking large submarines into contested spaces 'prohibitively difficult', which will potentially hurt the large Japanese submarines, the Soryus, just as badly as those Australia would be proposing to develop here.

The other question I would want to throw into the debate is whether these submarines are proposed for protecting Australia's territorial integrity or the sea lanes and approaches around Australia and, if so, why they are required to be such long-range vessels. Are these in fact designed to put an Australian capability into the South China Sea in the event of a conflict there? If so, we should not be pretending that these submarines are simply for defensive use and the protection of Australian maritime assets or the sea lanes and approaches around Australia and Indonesia.

Those are the sorts of questions which have been almost entirely missing from the debate as we rush to who can make the quickest jobs announcement in Adelaide. Of course jobs are important, but for $500 million of the $50 billion you could provide a rather extraordinary number of jobs in other sectors. Try to imagine that for $50 billion we could offer nearly 1.7 million people free university degrees. For $50 billion obviously we could wipe out the budget deficit and pay off a significant amount of debt but we could also provide 211,000 new homes in the middle of a housing affordability crisis or we could effectively invest to get the clean energy industry on its feet. To my mind, those opportunity costs are precisely what are being lost in this debate.

Finally, quite frequently lost in this debate are the opportunity costs of defence spending against all of the other things we could be putting these sorts of investments towards. It is only in defence policy where questions of industry protectionism simply go out the window. So all the Greens are asking is for the actual capability that we need to be at the front of the debate, not back of mind, rather than assuming that we need these submarines because of the decision made by Kevin Rudd in 2009. (Time expired)

10:43 am

Photo of John MadiganJohn Madigan (Victoria, Independent) Share this | | Hansard source

I fully support an Australian build for our future submarines. I believe, however, a vote on this amendment to the Omnibus Repeal Day (Spring 2014) Bill will have no consequence as it stands, as the government will not pass this bill in the lower half. How about I suggest something novel here? How about practising statesmanship for once? How about putting Australia's jobs, our national interest and our security first for once? We are becoming the laughing stock of the world when we speak about our future submarine build. We require certain characteristics in our submarines that the Soryu class submarine does not have. There are many questions in this whole debate that require us to be states men and women and to have a deeper understanding of what we are talking about. How about putting people before politics? How about stopping the point scoring?

Australia's strategic interests are directly linked to being able to project our forces away from our shores. How about the fact that our submarines need to operate in the northern and southern hemispheres? How about the fact that there are different rates of corrosion in the ocean between the northern and southern hemispheres? There are all the technical areas that are in this. How about looking at how we compare the quotes that are given to us? And how about government and the unions all working collaboratively for the benefit of Australia? This is such an important issue that people should put aside their politics and work in Australia's national interest.

10:45 am

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Minister for Employment) Share this | | Hansard source

I thank honourable senators for their contributions. Listeners to this debate would be forgiven for thinking that we were discussing a bill on the procurement of the next generation of submarines for Australia.

In fact, we are debating a repeal bill to clean up our statute books and to remove redundant red tape—the Omnibus Repeal Day (Spring 2014) Bill 2014. That is what this bill is designed to do, to ensure that oppressive legislation, otiose legislation and dated legislation are removed from the statute books to ensure that business—especially our small businesses—can be relieved of a red-tape burden, get on with business and create the jobs that this nation so desperately needs.

Instead of having a debate about the need to reduce red tape we have a stunt by Senator Conroy in moving an amendment. Can I simply say to Senator Conroy that decibels are never a substitute for a decent debate. The shouting of Senator Conroy usually confirms the paucity of his argument, and today was no exception. The consequences of Senator Conroy's amendment—and I will get into those—will be quite self-evident shortly.

In relation to the Green's contribution, I must say that I often think I live in a parallel universe when I hear the Greens set themselves up as experts on matters of defence and defence procurement.

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

Are we not entitled to an opinion?

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Minister for Employment) Share this | | Hansard source

I at least acknowledge the way in which they presented, as did the other senators—including Senator Xenophon and Senator Madigan.

Can I say in response to Senator Madigan, who was the last speaker, that I happen to agree that Australia does become a laughing stock when this, the senior chamber of the Australian parliament, seeks to dictate defence procurement policy by tacking on an amendment to a bill dealing with the repeal of dated legislation and red tape. People around the world would say, 'Excuse me? Is this really the way the alternative government does business, that the Labor Party would move an amendment to such a bill to try to ventilate and force a particular type of procurement?'

And the sad answer is that that is exactly the way the alternative government does business. Witness the NBN debacle, the pink batts debacle and the school halls debacle. Exactly the problems they got themselves into whilst in government would be repeated in the event that they were re-elected. In his very sensible contribution the honourable senator, Senator Madigan, also said to look at quotes and to do a bit of a comparison. Well, we have a competitive evaluation process. We are calling in bids.

Isn't it interesting? Last time around, Senator Conroy said with his amendment that there had to be four bidders. And just in case colleagues are wondering about this, the last lot of Senator Conroy's amendments when this was around said, in clause 3:

At least 4 bidders must be invited to participate in the limited tender.

Guess what? That has now been dropped. This is defence procurement on the run—slipshod, like he did the NBN, like Labor did pink batts and like they did school halls. It was a good idea at the time; now all of a sudden it is a bad idea. Just quietly remove it from the amendment and now we have a different amendment.

Just imagine if the government would have acted in December last year on Senator Conroy's amendment. We would now be here today with the Labor Party saying, 'Oh, the four bidders idea was no good. Why on earth did you go down that track?' This is why the Australian Labor Party cannot be taken seriously and that is why we as a government will not take them seriously.

Indeed, the amendment that is now before the chamber tells us in item 2:

The submarine design and building contract must not be entered into other than as the result of a limited tender …

Right? It has to be a limited tender. The next item tells us:

The future submarine project is taken not to be an exempt procurement …

If it is not to be an exempt procurement, it means it has to be an open procurement. So this is internally contradictory! Can you imagine defence companies around the world, scratching their heads and saying, 'If Senator Conroy were to become Minister for Defence we would be told it has to be an open tender and a limited tender all at the same time.' It is internally contradictory. They would be scratching their heads and asking, 'Oh, I wonder how this works?' And, of course, Senator Conroy would point them to the NBN, pink batts and school halls and say, 'That's exactly how it would work.' Debacle, after debacle, after debacle.

Can I say to honourable senators if the amendment were to become law it would compromise the existing competitive evaluation process to acquire submarines, a process that is consistent with the Commonwealth procurement rules under the relevant act. In addition, it would increase costs and delay completion of procurement risking a significant gap in Australia's submarine capability and increase regulatory burden by imposing specific tender requirements for a single piece of equipment conducted by a single department.

I have already pointed out the ad hoc nature of these amendments: they are internally inconsistent; they differ from Labor's procurement strategy in December last year. We have a different strategy now, in August. And—wait for it—there will be another strategy, I am sure, that will be announced in due course. But what Labor are demonstrating—and what Mr Shorten through his spokesman Senator Conroy is demonstrating—to Australian defence industries and to the French, German and Japanese competitors for the future submarine project is that they do not take these matters seriously.

Mr Shorten's legacy in Defence and his former Labor government was a cut of $16,000 million from Defence. As a result, defence industries shed 10 per cent of their workforce—and heading south—courtesy of Labor. So let's not have any crocodile tears about defence workers here. The valley of death that the shipbuilding industry faces in Australia is courtesy of Labor not doing anything during their six years. Who has now developed a long-term strategic plan to overcome that for the future, looking 20 years in advance? None other than the coalition government. Were people trying to bully, harass and harangue us into coming to an earlier decision? Yes, they were; but we took the time to plan and be methodical to ensure that in the future the valley of death left to us by the Labor Party could be overcome, and now it will be overcome because of our policies.

In Labor's six years they made no progress—and I repeat that: no progress—on the future submarines that are to replace the existing Collins class. They did not order a single naval vessel from an Australian shipyard. They abandoned Australian shipbuilders. Yet here they come into this place pretending to be their champions. Their legacy of six years is: 'Do nothing'.

If we were to go down the track that Labor are suggesting, it would take another five years of planning—in other words, six years of doing nothing plus another five years—it would be an 11-year or in round figures a 10-year capability gap for our submarine capacity. That is why we have established a competitive evaluation process, to ensure that we get the best international design partner and the best submarine capability at the best price while avoiding that critical capability gap left to us by Mr Shorten and Senator Conroy.

The opposition's amendments would force the government to go to tender for the future submarines, yet on page 53 of the Foreign Affairs, Defence and Trade budget estimates Hansard from 1 July this year, Defence advised the committee—and Senator Conroy sits on this committee: 'Going to tender will take up to an additional five years'. And that is on top of the six years that have already been wasted during the Labor era. Put simply: the opposition is willing to risk the safety of our submariners and put maritime and national security at risk just so they can score a cheap political point.

Our competitive evaluation process requires the three potential partners to seek offshore onshore and hybrid build options as part of our competitive evaluation process. Australian industry involvement will be assessed as part of this process, and certain work will be conducted in Australia, regardless of the outcome. As TKMS chairman and respected submarine expert Dr John White said at the Senate economics committee recently, 'The prudent approach to such a major acquisition is to canvass the market and see what is available, including from overseas'. That is exactly what we are doing.

If the Senate were to adopt these amendments, it would delay the submarine acquisition process that is currently underway. It would generate significant corporate and sovereign risk for the current design partners. It could threaten their ongoing willingness to participate in our Future Submarine program, in which they have already made significant investments.

I indicate as well that my South Australian colleagues have of course been very strong supporters for building submarines in South Australia, but they will not be supporting a move that seeks to dictate the procurement process through a Senate stunt such as this. Their well-considered position on this has been put to the people of South Australia through their speeches through their statements and through the articles they have written. So any diminution or suggested lack of advocacy on their part—as claimed by Senator Conroy—is completely dismissed. Yet again Senator Conroy makes the false assertion in the face of the obvious facts. I say to Senator Conroy that mere repetition of false assertions does not obviate the need for evidence. And the evidence is there, courtesy of my South Australian colleagues, as to their advocacy.

Coming back to the matter at hand, this is a repeal bill to remove red tape and dated legislation from the statute books. In the past this has been a bipartisan process. But today we have yet again seen that Labor under Mr Shorten will use any stunt to try to stymie the government's desire to: have good governance, remove red tape, help stimulate the economy, help create jobs and help grow the wealth of our nation so that we can look to a better future. All of that is jettisoned for the sake of a political stunt, suggesting that you can just tack on Defence submarine procurement, a multi, multi, multi-billion-dollar activity, as an amendment to a repeal bill dealing with dated legislation.

This is the way the Labor Party would do business. That is clear. Just witness the NBN, the pink batts and the school halls. And now they would repeat their mistake with Defence procurement. We as a government will not be part of that. We will be taking the responsible decisions. We will take the methodical, purposeful approach to ensure that we get the very best capability at the very best price with the most Australian content possible. I oppose the amendments put by the opposition.

11:00 am

Photo of Stephen ConroyStephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

If I had taken the time to make a point of order on each and every point where Senator Abetz's contribution misled this chamber, I would have been on my feet constantly in that last 15 or 20 minutes, because almost nothing that Senator Abetz said about this amendment is true.

What this amendment does is recognise that the process has moved on and that it is too late, if we want to build our submarines, to avoid a capability gap that is now going to be acknowledged in the white paper. That is now the fault of this government for interfering in the processes and doing a deal with Japan to hand it over.

All this is saying—accepting that there is a process underway where each company is required to submit three bids, for a domestic build, a hybrid build and an overseas build—is: when it comes to the consideration in December of those three proposals, only consider the Australian builds. That is all the amendment says at its heart. Almost everything else that Senator Abetz raised, talked about and tried to introduce false information on was completely and utterly false and designed to confuse the debate in the chamber. When the facts do not suit, just create your own facts. That is the approach taken by this government. I do not want to hold the Senate up any more on this, but senators should not be fooled by that contribution by Senator Abetz. He got it completely wrong. This amendment does one simple thing at its core: when you get the three different types of bids from the three companies involved, only consider the Australian builds.

I urge senators to support what is best for this country, its defence needs and its capabilities and to support the shipbuilding industry in this country. As John White, lauded by Senator Abetz, said at the same Senate committee—and this should be the thing that every senator remembers—it is cheaper to build, maintain and sustain these submarines in Australia.

Any decision to build overseas will be a captain's pick—that this government made a promise to the Japanese Prime Minister and will roll over the good efforts of Senator Edwards and others in the coalition who recognise that the need for us to have an Australian shipbuilding capacity, as an island nation, is vital to this country's strategic and military interests.

The CHAIRMAN: The question before the chair is that the amendment moved by Senator Conroy on sheet 7749 be agreed to.

The CHAIRMAN: The question now is that the committee not insist on amendment (7) with which the House has disagreed, and agrees to the new amendment moved by Senator Conroy in its place.

Question agreed to.

The CHAIRMAN: The question is that the resolution be reported.

Resolution reported; report adopted.

The CHAIRMAN: The committee has considered message No. 334 from the House of Representatives relating to the Omnibus Repeal Day (Spring 2014) Bill 2014 and has resolved to insist on amendments (1) to (6) to which the House has disagreed and has not insisted on amendment (7) but has made an amendment in its place.