Senate debates

Monday, 30 November 2015

Questions without Notice: Take Note of Answers

Defence Procurement

3:27 pm

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

I rise to take note of the answer to a question asked by me of the Minister for Defence, Senator Payne. This is a very serious matter for Australia, in particular for South Australia. Whilever the other side keeps regurgitating the line that somehow or other this was the Labor Party's problem, I will remind them that the coalition committed to build 12 new submarines in Adelaide: 'We will get that task done. It's a really important task not just for the Navy but for the nation. We're going to see the project through and put it very close after force protection as our number one priority if we win the next federal election.' That is the scenario we once again face. Here we have the third defence minister and we know there have been two Prime Ministers, and the voting public of South Australia are keenly aware that something is very much awry.

We asked a simple question not once, not twice but three times: did you have 12 submarines in the competitive evaluation? Were there 12 or was there another figure? Are you committed to 12? Will you build 12? And we are seeing the same prevarication, the same obfuscation as from Senator Johnston when he was defence minister. It continues to be a huge issue in South Australia. We know from the South Australian Minister for Defence Industries and from defence strategists and economic experts that any less than 12 submarines will not provide the certainty, the climate, the industry for investment. We know this. People have done these figures to death and any less than 12 will be problematic for a number of sectors in Adelaide. The Premier of South Australia has called upon the new PM to build the 12 submarines in Adelaide and honour the promise. An overseas build would be a fatal blow for the South Australian economy, as would a hybrid build. These things are very clear and they are on the table. As we speak, a new expert economic report supports the building of Australian submarines. Why would it not? This report highlights that an estimated $5.5 billion in tax is recouped by the government under the 'no change to budget' assumption in this model—the need to cut other government programs to cover the cost of submarines.

Secondly, if submarines are built overseas there is a $6.2 billion increase in the cost to the Australian federal government, if the Australian dollar mean exchange rate reverts to a purchasing power parity of 74c, as compared to the models of 92 US cents. This excludes the cost of hedging. Simply put, if we employ Australians and they pay tax and they are employed by Australian companies that pay tax then that investment of taxpayers' dollars comes back to the state and federal governments in a dividend. But if we employ overseas workers to build the submarines they will, rightly, pay their taxes in Germany, France or Japan, and there is no return for the Australian taxpayer.

We need a serious, early commitment in South Australia to maintaining manufacturing. They have closed the automotive sector. It is closing down in 2017, with an incredible loss of jobs and an incredible stress put on small business. Christopher Pyne, the Minister for Industry, Innovation and Science, was on the Sky News channel this morning saying quite clearly: 'We are getting things passed through the Senate under the new leadership of Prime Minister Turnbull and treasurership of Scott Morrison. Over the next five to six months leading up to the budget we will see even more domestic policy, and we have a plan that will create jobs and growth.' If they are serious about this, build the submarines in South Australia—you will create jobs and growth.

Question agreed.