Tuesday, 13 February 2018
Foreign Affairs, Defence and Trade References Committee; Report
I present the fourth interim report of the Foreign Affairs, Defence and Trade References Committee on the impact of Defence training activities and facilities on rural and regional communities. I move:
That the Senate take note of the report.
I rise as Chair of the Senate Foreign Affairs, Defence and Trade References Committee to speak on the fourth interim report for the committee's inquiry into the impact of Defence training activities and facilities on rural and regional communities.
As have noted previously, the committee has tabled interim reports after each of the rural and regional hearings so that issues highlighted by local communities can be raised soon after the hearings instead of waiting for the final report to be handed down.
This report covers public hearings in Bendigo and Wodonga in Victoria. In addition to two public hearings in Victoria, the committee conducted a site visit to the Puckapunyal military area, just outside Seymour in Victoria.
Focus of the committee
As outlined in the previous interim reports, the 2016 Defence white paper, released in February 2016, set out the government's intent to strengthen and increase investment in Defence capabilities.
Government ministers have emphasised that the new investment in Defence will create jobs across the regions and bring benefits to local businesses and communities.
These policies and statements from the government have generated expectations that the regions will be able to benefit directly and indirectly through the participation of local businesses, particularly small and medium-sized enterprises, in building Defence capability.
The focus of the committee has been to investigate whether regions, local communities and businesses have sufficient awareness of and effective access to information about the plans to upgrade training facilities so that they can be in a position to offer goods and services.
When visiting Victoria, the committee was pleased to hear that there was a genuine goodwill from local councils, businesses and community representatives towards the Defence presence in their region, as well as recognition that there are benefits to both Defence and the broader community as a result of collaborative relationships.
To ensure this level of goodwill continues, it is important for Defence to ensure that existing relationships are maintained and new opportunities for communication and cooperation are pursued.
A number of specific issues were examined by the committee in the Victorian hearings.
Communication and engagement
Similar to previous hearings in this inquiry, the committee heard that in Victoria that the local base commandant is central to building a collaborative relationship between Defence and the local community.
Witnesses provided examples of successful events that had been run in collaboration with the base commandant.
Of interest to the committee is that the length of time a Defence presence has been in a particular region was not necessarily a determining factor for the presence of established and well-functioning communication mechanisms in the local community.
The committee will give this issue further consideration in the final report.
Evidence to the committee indicated that there are some formal mechanisms in place for organisations such as local councils and chambers of commerce to communicate with Defence.
Other communication occurs on a more informal basis. With particular reference to emergency services management, the committee heard examples of consultative forums comprising representatives from Defence, local government and other agencies that are working and operating effectively.
It was suggested that these forums could be used as a model for other areas of engagement with the community.
Defence engagement with industry
Local business representatives in Wodonga suggested that Defence is often not actively engaged with industry, particularly when developing tender documents.
Businesses feel that they have a contribution to make to assist Defence to ensure that their tender documents reflect industry standards and current practice.
It was noted that early engagement with industry may benefit Defence projects.
The committee heard from some business representatives highlighting the challenges experienced to receive timely payment for work undertaken for Defence contracts, particularly when the work was undertaken by, or for, tier 1 contractors.
Businesses had positive experiences with the payment system used by Defence but reported challenges with payment systems used by prime contractors, which often led to payment delays.
It was suggested that in order to improve the experience of businesses undertaking Defence work, consistency in the method of payment would be beneficial.
Contribution of small and medium enterprises
It was very pleasing to hear about the contribution made by small and medium enterprises to fulfilling Defence contracts.
I would like to take the opportunity to provide more detail about one particular example provided to the committee.
In Wodonga, the committee heard from Pentarch, an organisation specialising in the disposal of munitions and managing ammunitions packaging, with offices located in both Victoria and New South Wales.
Describing themselves as a 'small prime contractor', the representative from Pentarch explained the work they undertake for Defence, with a lot of involvement from local industry.
The committee heard that Pentarch produces what they call a 'family tree' to illustrate their involvement with local industry.
In reference to the Victorian site: of the 91 suppliers, 55 are local. Similarly, at the New South Wales site, 58 of the 98 suppliers used are located within 100 kilometres.
This organisation recognises the value of local industry and also noted that they have encouraged other prime contractors to use local suppliers.
Access to Defence facilities
A key issue raised at both hearings in Victoria related to the ability of community members to access facilities located on Defence bases.
Of particular concern to witnesses was facilitating easier access to military museums located within the perimeter of Defence bases.
It was emphasised that increasing visitor numbers to these facilities is important in the context of the local regional tourism industry as well as promoting greater community awareness of Australia's military history.
Although the military museums located on Defence bases in Puckapunyal and Wodonga are open to the public, access can be difficult due to security requirements.
Witnesses suggested that Defence consider options to improve access to these valuable facilities.
The committee has made five recommendations in this interim report:
• that Defence, in consultation with local councils, review the existing regional communications mechanisms and consider establishing a regular forum to discuss local business opportunities;
• to include a provision in Base Services contracts for tier 1 contractors to use a payment system similar to that currently used by Defence; and
• to make information available to local communities about Defence expenditure in the area;
• that Defence review the accessibility of military museums located within Defence bases and investigate options to improve access; and
• consideration be given to tailor security arrangements to the PMA in limited circumstances.
Once again I thank all of the committee members for an extremely bipartisan approach to this inquiry.
The evidence gathered so far has been most valuable, from a number of locations around the country.
While there have been a number of location-specific issues identified, the inquiry has highlighted a broader, systemic set of issues that are ongoing.
For example, the committee has received a submission from an organisation providing additional evidence following the committee's first public hearing in Port Augusta.
A key issue highlighted at this hearing was the Cultana Training Area Expansion project, and the submission expresses concern about the level of engagement between the prime contractor for the project and the local businesses.
This is an issue that has been raised at every site that we've held hearings at around Australia.
We will hold a final public hearing with Defence to consider a number of these systemic issues before presenting the final report.
I would finish on this. There's a 2016 white paper that sets out the Defence objectives. We visited a number of sites. We found systemic issues. There is no dissent, I believe, among the general membership of the committee. We are doing useful work to engage regional and local economies with Defence expenditure. It's a no-brainer. It's common sense. All governments would want to act this way. We need to sort out these systemic issues about broader consultation and the economic opportunities, and fix systemic issues like not paying people on time.
7 I commend the report to the Senate.
I seek leave to continue my remarks later.
Leave granted; debate adjourned.