David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I present report 170 of the Joint Standing Committee on Treaties, Social Security AgreementNew Zealand; Nuclear Research Cooperation Agreement; Loan AgreementInternational Monetary Fund; Harmonization of Wheeled VehiclesRevision.I move:

That the Senate take note of the report.

Question agreed to.

Today I rise to make a statement concerning the Joint Standing Committee on Treaties report No. 169, Future Submarine ProgramFrance, Classified Information Exchange—France, which contains the committee's review of two agreements with the French republic. The first agreement is a framework agreement to support the Future Submarine program. The second agreement is an update to an existing agreement from 1985 to enable the exchange and protection of classified information. The report was tabled out of session in April.

The framework agreement for the French submarine program has five general objectives. First and foremost, the agreement provides for the transfer, ownership and use of French-owned technology and information to Australia. Second, the agreement establishes obligations on France to ensure Australia's sovereign operation of the future submarine and security of the supply of information and equipment. Third, the agreement provides for maximum local industry engagement. The fourth and fifth objectives of the agreement provide for the joint development of research and technology and a governance performance framework for the program.

The committee supports the framework agreement, but we note it is merely the first step in ensuring Australia's national interests in the Future Submarine program are protected and maximised. The committee explored this in some detail, and here I raise two main issues. First, we must ensure that the mistakes that were made in previous Defence acquisitions are not repeated. The agreement provides a solid starting point but. Clearly. the committee looks back at the experience of the Collins class submarine to ensure that all lessons there are learnt. I point out here that, again, the Collins class submarine in many respects is now a significant success story—not only the build but, in recent years, also the development of its availability and combat effectiveness.

The things that let it down were largely part of the commercial arrangements, where the design artefacts required were not agreed up-front in terms of the agreement between Australia and its overseas partner. This government-to-government agreement is an attempt to make sure that the lessons we have learnt from Collins are well and truly in place as we move into this Future Submarine program with the French republic.

This agreement makes sure that the intellectual property for the Future Submarine can be stored, managed, maintained and upgraded to guarantee Australia is always able to operate, maintain and sustain the next generation submarine. That means that the design artefacts are available to people in Australia who have been given the skills needed to access, interpret and use that information so that Australia can make the sovereign decisions it needs to around the submarine not only during the build phase but also, importantly, in the decades to come, particularly as that submarine is upgraded iteratively through the continuous build process. The committee has requested that the department report back to the committee in the winter sittings of 2018 on its progress in obtaining and managing the necessary intellectual property.

The second issue is the French obligation to maximise local Australian industry engagement in the Future Submarine program. As the largest Defence acquisition in Australia's history not only does the engagement of Australian industry and that sovereign capability ensure that Navy will get affordable, effective and available capability over the life of this but also, clearly, it provides opportunities to Australian industry directly in the program and also in the spin-offs that will benefit many other sectors. The committee notes that maximising local industry, though, will need effective implementation of contractual and other arrangements that will sit underneath this treaty, bearing in mind, again, this is a government-to-government treaty not a commercial arrangement with the company.

The committee recommends that the government ensure the detailed agreements and arrangements allow for Australian companies to bid for work in all phases of the program on a preferred basis, all other things being equal. I go further and look at the Defence industry policy statementthat the government released last year, where we have put in place processes to understand what are sovereign defence industrial capabilities that we need to support given military capabilities. That process, I believe, is one of the mechanisms whereby we will identify what it is we need here, in terms of the competence of individuals, the capacity within industry in the supply chain that supports this submarine not only through the build of the 12 initial submarines here but, importantly, through its life of type. And that sovereign industrial plan that is part of the Turnbull government's Defence industry policy statementwill be a powerful tool in making sure that the contractual agreements and arrangements that underpin this program do, in fact, deliver us that sovereign ability to not only build but also operate, maintain and upgrade these submarines in years to come.

The committee has requested the department report back to it on the contractual and other arrangements that have secured these opportunities for Australian industry and, importantly, have secured the sovereign capability that Australia needs. Noting these recommendations, the committee recommends that the parliament proceed with binding treaty action. Report 169 also deals with Australia's bilateral agreement with France for the exchange and protection of classified information. Again, this is at the government-to-government level and it seeks to strengthen existing arrangements between Australia and France for the exchange of information. Although the agreement is a stand-alone treaty action, it was tabled at the same time as the framework agreement for the Future Submarine program. Indeed, the agreement will support the Future Submarine program throughout all stages of construction and sustainment. I note that in this budget released yesterday funding is starting to be made available now for the progress not only of work on the shipyards in Osborne but also of design phases for the submarine. So this exchange of information will increasingly become important from this calendar year forward.

The agreement is more comprehensive and prescriptive than its 1985 predecessor. It has four key features. First, it requires the parties to protect classified information to a standard at least equivalent to the protection afforded domestically. Second, it sets out how classified information can be transferred between the parties. Third, it enables Australia and France to mutually recognise security clearances of government officials and contractors. And, finally, it regulates how each party enters into or authorises classified contracts in the territory of the other parties.

As with previous agreements, the committee did rely on assurances from government that the classifications and security clearance processes are equivalent. The committee did not receive detailed evidence to verify these equivalences and, therefore, has not formed a view on the matter. The committee regularly reviews treaty actions of this kind and considers that the treaty action is non-controversial. However, throughout the course of the inquiry the committee was alerted to a number of matters that we have concluded in the report. Chief among those are the timeliness, method and integrity of personnel security clearances. The committee expresses concern about delays in obtaining security clearances as they have, in the past, hindered businesses in their ability to bid for Defence work. There have also been problems in the limited scope of sponsorship to obtain security clearances.

In order to be an effective element in maintaining the confidentiality of information, personnel clearances and processes must be sufficiently thorough. The committee notes in its report the personnel clearances should be continually assessed and based on the information received across organisations and jurisdictions. The committee recommends that the government bring forward as a matter of urgency its work program to connect state and federal law enforcement and judicial information systems with the personnel security clearance systems. Noting this recommendation, which builds on a number of recommendations that Senate and joint committees have made around security clearances and the timeliness of them, the committee recommends that binding action proceed.

Lastly, the committee's report 170 looks at four separate treaty actions: a renewed social security agreement with New Zealand; an agreement to enable a nuclear research corporation in the Asia-Pacific; a renewed loan agreement with the International Monetary Fund; and revisions to an existing agreement that harmonises regulations for the safety of vehicles and their parts. The committee supports these four treaty actions in report 170 and recommends that binding action be treated.

On behalf of the committee, I commend the two reports to the Senate.

Question agreed to.