Senate debates

Monday, 17 September 2018


Future Submarine Project; Order for the Production of Documents

10:01 am

Photo of Marise PayneMarise Payne (NSW, Liberal Party, Minister for Foreign Affairs) Share this | | Hansard source

I set out the government's position on behalf of the then Minister for Defence Industry in relation to the documents sought in order 862 in my letter to the President of the Senate of 25 June 2018. The final cost estimate template that DCNS, now Naval Group, submitted in response to the Future Submarine Competitive Evaluation Process, the CEP, is of a commercially sensitive nature. The release of the pricing details would severely undermine Naval Group's ability to do business, to tender for further submarine work and to maintain a competitive edge in a commercial marketplace. The offer which was made by Naval Group had the support and the backing of the government of France. Releasing these details would not only undermine Naval Group's competitive position in the marketplace but has the potential to damage our international relationship with France.

I note that the movers of the motion also sought access to this information under FOI and that the decision-maker denied access to the information under sections 47C and 47G of the FOI Act. This information remains sensitive and not for public disclosure. The documents that are sought in order 862 contain material commercially confidential to Naval Group. It includes fee and price details. It includes special terms unique to the Future Submarine program. I also note that sensitive commercial negotiations are still underway between the Australian government and Naval Group, and those negotiations go directly to the documents sought in order 862. Those negotiations are still underway. The release of these documents at this time has the potential to prejudice those ongoing negotiations and to prejudice the Commonwealth's commercial position in this important program. For that reason, and for those other reasons I've already mentioned, I am advised by the Minister for Defence Industry that the government maintains its public interest immunity claim.

It is also important to note that the acquisition costs of the Future Submarine program included more than the design and construction of the Future Submarine. As is stated on page 89 of the 2016 Defence integrated investment program, the acquisition cost of the Future Submarine capability is estimated at greater than $50 billion out turned, which includes: the cost of designing and constructing the fleet of 12 submarines; the cost of designing and integrating the combat system in each of the 12 submarines; the investment in science and technology that will be required; the delivery of logistics support, including documentation and initial sparing; and the design and construction of the submarine yard and other land-based test facilities—for example, wharves, the training centres, crew facilities and so on.

The initial estimate of the sustainment costs of the Future Submarines is approximately $50 billion, constant over the life of the Future Submarine fleet, which will extend to around 2080. Both the acquisition and sustainment cost estimates for the program will continue to be refined as design of the Future Submarine continues. Estimates are developing over time, and with more information they'll become more accurate and will be available after critical design review, which is scheduled to take place in 2022.

As a senator and a minister in this place I absolutely understand and appreciate the concerns, views and perspectives which those opposite, who moved the motion, bring to this discussion. It's not the first time we have engaged in these exchanges—it's most certainly not the first time in this chamber and we also have significant engagements in the estimates process.

I do think it is important to note that we are at a very sensitive point in time. The commercial negotiations are still underway. The material which is being sought is of a commercially sensitive nature. As I said in my earlier remarks, the release of the pricing details would ultimately severely undermine the Naval Group's ability to tender for further submarine work and its ability to maintain a competitive edge in a commercial marketplace.

Most of all, I don't understand the approach which would see the position of the Commonwealth government compromised in the process of commercially sensitive negotiations, which is the position the government is concerned the release of these documents would leave us in, given the timing. I'm advised, as I said, by the Minister for Defence Industry, who I represent in this place, that the government maintains its public interest immunity claim.

10:07 am

Photo of Rex PatrickRex Patrick (SA, Centre Alliance) Share this | | Hansard source

I move:

That the Senate take note of the statement.

The minister's response to this OPD is totally unacceptable. The idea that the Senate is not permitted to have visibility to basic cost information is totally ludicrous. We are dealing with a $100 billion project. The public interest lies in disclosure at the very least of basic information. I will describe to the chamber what number is being sought here. It's not a number of a submarine that might be sold into another market. It's not even a real submarine; it's a preconcept design—that is, it is an indicative design to set very top level requirements. Since DCNS, now Naval Group, won the CEP, the Commonwealth has paid $143 million to Naval Group France and another $42.7 million to Naval Group Australia to advance a detailed design. As the minister has indicated, Admiral Sammut has testified to the Senate at estimates that we will not know the price of the Future Submarine until 2022 when the submarine's critical design review is conducted. The number the Senate has sought in this OPD is not a commercial number.

The refusal by the minister of this non-commercially sensitive number being tabled is made more offensive by the fact that the Commonwealth Procurement Rules make explicit reference to the fact that, whilst the need to maintain confidentiality is important, it must always be balanced against the public accountability and transparency requirements of the Australian government. The Commonwealth Procurement Rules state that officials should include provisions in request documentation and contracts that alert the potential supplier to the public accountability requirements of the Australian government, including disclosure to the parliament and its committees.

The minister talked about negotiations that are underway. Yes, we are in negotiations. We are negotiating a strategic partnering arrangement with DCNS of France, but there is no number in there. There's no build number in that particular negotiation, because we will not, as the minister stated, know the cost of these submarines until 2022.

The Future Submarine project is an important project. It's important both for national security reasons and for industrial economic reasons. Our Future Submarines are critical to our defence. They have capabilities that are ever more important in a day and age where almost anything can be seen by satellites and other remote-sensing equipment. Peacetime roles for submarines include basically having the deterrent so that we don't ever have to go to war but also getting ready for war: making sure our sailors can go to sea and train, making sure they can develop tactics for their submarines and making sure that they can keep an eye on neighbours through intelligence-gathering exercises or operations. They also can be used for policing activities, for counterterrorism roles, for fisheries patrols and also for Special Forces operations. That's just in peacetime. In wartime, we crank that up to antisubmarine warfare, antishipping warfare, mining and Special Forces operations. The Future Submarine is an important capability. It's also important from an industrial perspective. It's part of the government's naval-shipbuilding program, which is an important program and one that Centre Alliance supports. We can't get this wrong.

However—moving to the costs—at the start of this project, back in 2009, the number being bandied around for everything was $50 billion. That was for everything. The Defence 2016 Integrated Investment Program indicated that the Future Submarine design and build would be $50 billion on an 'out-turned price basis', meaning that things such as inflation were built in. On 20 May this year, Defence gave evidence to estimates that the Future Submarine design and build cost would be $50 billion in constant dollars, as the minister has just reiterated. To make sure everyone's clear: that's for acquisition. There's still another $50 billion being set aside for sustainment.

On 6 June this year, the Australian Strategic Policy Institute indicated that the figures provided at estimates equated to a design and build cost of $79 billion and a sustainment cost of $124 billion in out-turn dollars. Let everyone be very clear. We're talking about a program that is worth close to $200 billion. We spend lots and lots of time in this chamber debating personal tax cuts, corporate tax cuts and a whole range of cuts to expenditure, and yet this $200 billion program has almost gone unnoticed. We've got a project that started off at $50 billion and has doubled, and the Senate is blind as to the reasons.

As I revealed in question time on 20 June, the German submarine builder TKMS wrote to then Minister Payne reaffirming their offer for the design and construction of twelve 100-per-cent-Australian-built Future Submarines. Their letter stated that they would have built 12 submarines that would have met Australia's requirements, in Australia, for a maximum of no more than $20 billion for the project. It's off the back of that that I want to know what the French number was. We have an acquisition cost of $50 billion in constant dollars. The submarines should be less than $20 billion. Where's the additional money being spent?

The minister has indicated that there are additional things that need to be factored in: the cost of the design; the cost of the investment in science and technology; the delivery of logistic supports, including spares; the design and construction of a submarine yard down at Henderson, in Western Australia; wharves; training centres; crew facilities; land based test facilities, including test sites for mechanical component testing before components are installed into the submarine; a propulsion land based test facility; combat system and integration facilities; and so forth.

But I've been around submarines for a long, long time, and the numbers don't add up. For a project of such value, we need much more oversight. It's not unreasonable for us to understand what the basic cost was that DCNS offered when they won the CEP, and I will point out that I, under FOI, have managed to obtain the final number that Lurssen presented in respect of the OPV program. The minister is right: I have FOIed this number, and it is still before the Information Commissioner, but we're going to be in a situation—as I will talk about later—where the Senate is ordering the production of documents, the minister is refusing, and then I get them under FOI. That's an almost unbelievable situation.

After receiving some answers, or responses, last week, I'm feeling even more concerned about this project. We seem to be building the most expensive submarine on the planet but designing in old technologies. For example, most modern submarines are moving to lithium-ion main batteries, with their much greater energy density—the same sorts of batteries we find in our iPads and mobile phones. They pack much more punch for their size and weight. They are at sea on Japanese Soryu class submarines, and my understanding is that the Singaporeans will put them on to their Type 218SG submarines.

Defence has advised the Senate that the first Australian future submarine will have a lead acid cell. Most modern submarines have air-independent propulsion capabilities, which improve the time a submarine can spend under water without coming up to use its snorkel to recharge its batteries. Australia, in contrast to most navies, will not be getting air-independent propulsion in its future submarines. It will, however, be getting a pump jet. Other than two trial submarines, one on a French submarine and one on a Russian submarine, conventional submarines do not have pump jets. They are inefficient at low speed, which is where conventional submarines spend most of their time, relying on that ever-so-important battery, and so are only found operationally on nuclear-powered submarines, where they have an unlimited energy source. The economics committee has heard compelling evidence from Mr Aidan Morrison, an expert in the field, that suggests that the pump jet is inappropriate for a conventional submarine, and he has done so through a very detailed paper.

Defence have a method for categorising the maturity of a technology—a scheme referred to as technology readiness levels. In an answer provided to me by Defence last week, they were unable to provide a technology readiness level for the pump jet. I find that totally amazing. It doesn't matter if it's 1, which is really just an idea, or 9, which is operationally proven—they couldn't give me a number.

So we have a submarine with a mix of dated technologies and completely new and unproven technologies—perhaps inappropriate technologies. More questions need to be asked and answered.

Moving to schedule, at best we will have a new submarine in the water in 2032, as the minister stated. A well-respected naval magazine I was reading on the weekend suggested it's more likely to be 2034. All the while, we have Russian warships venturing back into the Coral Sea, Chinese submarines regularly deploying into the Indian Ocean and talks of foreign naval bases being established in the Pacific. Yet we're designing a unique submarine that will get us to the South China Sea in the late 2030s. All the while, we have the Chinese coming to us. We have the Chinese operating their military assets in our waters today. Yet we are pitching for a high-risk, high-cost submarine that may or may not be delivered in good working order two decades from now.

We need to revisit what we're doing. This HMAS Turnbull class submarine needs to go the way of its namesake.

Finally, I wish to draw the presiding officer's attention to the list of OPDs that the minister has ignored. On 9 November 2016, this chamber requested documents related to the future submarine design and mobilisation contract. Only after an FOI released some of that information was it made available to the Senate, and then the Senate didn't accept some of the intellectual property claims that were being made by the government—that they have been left unanswered.

On 4 September, this chamber asked for the future frigate tender documentation. We were denied that documentation, under a claim of public interest immunity by the minister; but the documents were later released to former Senator Xenophon under FOI.

On 12 February, documents relating to the Australian Industry Capability Plan, submitted by DCNS to the Department of Defence in response to the Future Submarine CEP, were again denied to the chamber. Eventually, they were made available—once again, to former Senator Xenophon under FOI, after which the minister then tabled them in the Senate.

Now, in this OPD, we're simply asking: what was the cost of the pre-concept design submarine that was offered up to Australia to help us make our decision about who our partner would be? The Senate cannot and should not stand by the contempt that we are seeing in respect of OPDs. At some stage, the Senate needs to enforce its orders. It's a very important oversight mechanism, and we let ourselves down by simply letting the minister, over and over again, ignore the will of the Senate.

10:21 am

Photo of Kim CarrKim Carr (Victoria, Australian Labor Party, Shadow Minister for Innovation, Industry, Science and Research) Share this | | Hansard source

This matter of this particular OPD is of particular significance. I think that the government's right to claim executive privilege or public interest immunity in respect of parliamentary proceedings has a long history. It has to be acknowledged that, as a former minister, I don't believe I've ever had to claim it. Going from memory, I don't personally recall doing so. But I do want to state that the principle is one that I think we do have to consider very, very carefully. I do acknowledge that there are circumstances where any government will claim executive privilege and will claim the right to withhold documents for very sound reasons. I think it's been demonstrated that no government can operate without a degree of secrecy. There are negotiations and there are matters in which public servants have to provide advice to government, and they have to be confident that the advice will be frank and fearless. There are occasions when there are genuine commercial matters that need to be considered. As a former minister who had a bit of responsibility for commercial secrets, I acknowledge that things do exist in such a form that they are of benefit to competitors and, if released in the wrong way, can be seriously disadvantageous. There are genuine security questions in which the nation's genuine national interest can be affected by the release of information. So the principle of secrecy in government is one that we have to acknowledge is genuine and legitimate when one considers the actual operations of public policy. There are many occasions when I think the national interest can genuinely be adversely affected if matters that ought to remain confidential are in fact released.

Then, of course, there is the question of the proper accountability mechanisms in a parliamentary democracy. There has to be a proper balance in terms of the responsibilities of this parliament to ensure that governments do act in the public interest and that politicians are actually preserving confidentiality in the interests of the public, not in their own interests—for instance, to provide a shield to stop criticisms of their actions.

We have to keep those two propositions firmly in balance when considering our responsibilities, particularly in this chamber. I think the Senate has a particular role in regard to accountability in terms of ensuring that governments meet their obligations for the national interest. On the other hand, I think it has to be also acknowledged that, as politicians, we are more than capable of pursuing our own agendas in such a way as to present criticisms that are in fact unfair and unreasonable, and it may well be that we don't get the balance right. I think we have to acknowledge that as well when we're considering these questions.

These are matters of such importance that I remind senators that we are now in the circumstance where there has been some change in these questions. In my time here, I've noticed a significant change. This principle of providing that balance between the rights of government towards genuine public interest confidentiality, if I might call it that—commercial secrets, for instance—and the right for the public to know and for parliamentary accountability has shifted. Since 2009, all our proceedings in Senate estimates and the like have commenced with a statement. The chairs of the various estimates committees are required to read out a statement to officers so that they understand that the simple fact that they don't like answering a question and they claim that questions are within public interest immunity is not sufficient. The very fact that a government claims it is in itself not sufficient. It's up to this chamber to assess that claim. To make the assertion is not in itself sufficient.

We notice that that too often is the case, even today, despite the change that's occurred. No matter how many times these statements are read at the various parliamentary proceedings, there are still officers and there are still ministers who presume that their assertion is sufficient in itself. I can recall the circumstance within this government where the minister—the current Prime Minister, in fact, as immigration minister—made claims for public interest immunity and asserted that there were matters in regard to immigration questions that should not be made available in public for documents that he himself had not actually read. He simply made the statement to a committee—in that sort of arrogant, bombastic way that he does—that he was familiar with the documents; he didn't have to have actually read them before he made any declarations of public interest immunity.

We know that responsible ministers are more than capable of making quite cavalier statements about these issues. This is particularly significant for House of Representatives ministers. In my experience, it's all too common that representative ministers are obliged to make statements on behalf of House of Representatives ministers who are contemptuous of the Senate, are contemptuous of their parliamentary responsibilities and pay no regard to resolutions of this chamber, because in the House of Representatives they're just not familiar with the simple proposition that they are required to be responsive to the parliamentary procedures in the way in which governments are in the Senate. It's a simple fact of life because no government here is likely to command a majority. In fact, in my time here, it's only happened once, and that turned out to be a complete disaster for the government because it pursued industrial relations matters, when it had its head, which tended to prove to people what its real intentions were and undermined public confidence more quickly than it could possibly have imagined.

We have a situation in this parliament alone where there have been 124 occasions where this government has refused to respond to requests for documents. This has occurred 124 times. I haven't actually looked at the detail, but my guess is that most of those would be House of Representatives ministers. My guess is that's the case. I could suggest that Minister Pyne is a minister who could be categorised as probably the greatest exponent of contemptuous behaviour when it comes to parliamentary procedures, especially on matters that originate in the Senate, so that does put Minister Payne in the somewhat difficult position of representing him here; I acknowledge that. She's required to carry out the advice that he's provided, in the most flimsy of circumstances. We have a situation where there have been four sets of documents requested on the basis of returns to orders that have been rejected. On two of them, to date, the commissioner for freedom of information has overturned the government's assertion that they were matters of state security or commercial in confidence or whatever claims were made as to the proposition that the information should be withheld, and the third matter is still before the commission. So we have to recognise the pretty sorry history, in that regard, when it comes to these particular matters.

As to that circumstance, we have to say that the government's assertion that it must operate in secrecy has been undermined by the changes to the FOI laws that have occurred in recent times. The FOI requirements and the commissioner's requirements do mean that there will be a different set of criteria by which a minister cannot just automatically assert that he or she does not want to see this information made public. This is despite the fact that this government has cut the funding to the FOI office, has cut the capacity of the FOI commissioner and has reduced the number of commissioners who are available to do the work. Of course, the FOI commissioner—one commissioner now—is finding it particularly difficult to cope with the workload in these circumstances. This is the way in which governments respond to these difficulties. Rather than dealing with the substantive question of whether or not information should be made available, governments seek to retain information for themselves—not for genuine issues of national security or commercial in confidence but because they want to protect themselves from public criticism. That, to me, puts governments in an entirely different category altogether.

Let me deal with this particular matter. I do note that the minister, the Minister for Defence as she was then, representing the Minister for Defence Industry as he was then, did produce a letter to the President of the Senate on 26 June outlining the case as to why the government's position on the statement of public interest immunity should be upheld. Of course, it was nowhere near as substantive a proposition in that letter as the one the minister outlined today. I don't blame her directly for this because it was the sort of letter that I think was probably drafted in Minister Pyne's office. It's the sort of contemptuous proposition that we see time and time again, where the minister representing the minister is obliged to table a letter which doesn't actually argue the position very well at all. One has to look to the newspapers. In this case, if you turn to the Financial Review on 21 August—so, from 26 June, when the minister's statement is tabled, we have to go to 21 August to the Financial Reviewwe see quite a detailed report as to the state of negotiations between the Australian government and the French government and between the Australian defence department and the French authorities in regard to the contract discussions towards the development of what is called the 'strategic partnering agreement'. It's not good enough to provide this Senate or a committee of this Senate with important information about the state of play with regard to the expenditure of $50 billion, but it is good enough to provide it to the Financial Review. So matters of national security can't be provided to the Senate, but they can be provided to the Financial Review.

This article has all the hallmarks of a ministerial briefing, to the point where it's actually said, 'The minister has full confidence in the negotiators.' In particular, it says there are military officers who are conducting the negotiations. And here we have a statement where the minister is saying:

… I throw my complete support behind Rear Admiral Sammut in making sure the government holds firm on getting the right terms and conditions in the Strategic Partnering Agreement.

The article points out that the problems with French officials with regard to the contractual negotiations go to the issue of warranty—that is, warranty in terms of the new submarines that are being built—and go to the issue of the cannibalisation of the existing Collins class submarine workforce.

Then there is the question about the sale or the merger of Naval Group, and in particular the problem that emerges when the government has sought to treat this as a government-to-government negotiation, which is stated here as one of the reasons why the government considers the release of the template 'may adversely affect our international relations'. Of course, what they mean by that is the French naval company may be sold to an Italian company. So instead of dealing with the French government, we may be dealing with a company that's going to be owned by the Italian government.

Now, if this is the critical issue, why can't this Senate be advised? We don't have any intent to break national security; we don't have any intent to bust open the negotiating position of the Australian government. And surely, if this chamber can't be advised, a Senate committee can be advised as to what the details are. A number of Senate committees have looked at this question of this quite important naval contract. Remember, this is the government that couldn't find $200 million to keep the car industry going in South Australia, but can find up to $100 billion to keep the shipbuilding industry going. I don't begrudge the importance of maintaining an Australian capability with regard to naval shipbuilding—in fact, I think that's incredibly important. I just note that this is a minister whose preoccupation is not with a genuinely national naval shipbuilding program; it's with a national marginal seats campaign for the Liberal Party. And you would have thought that if they were genuinely concerned about this national project that will take us through to 2080, engagement with the parliament more broadly would have been a matter of higher priority for this government.

And so it is in this context that I think there is a more fundamental question here about the approach that this government takes to this important—very, very important—naval shipbuilding project. This is a project that will go way beyond the life of this government, no matter how limited this government's life would appear to be. By any imagination, there will be a turn in the political cycle. It is important that there be a proper discussion about these important contractual discussions that are going on at the moment. The opposition is entitled to know what is actually happening. This parliament is entitled to know what the engagements are. We should not have to read about it in the Financial Review. We should be able to have direct access to this information.

We want to know basic things. What will the level of local content be? What will the operations in terms of the Naval Shipbuilding College be? What will the skills acquisition process be? We are entitled to know exactly what's going on when the government once was willing to accept the assessment that there would be 90 per cent local content but now won't tell us what the local content arrangements are going to be. Isn't it ironic when none other than Dr Hewson, former leader of the Liberal Party, says there should be transparency in Defence procurement and says, about the government's claims of commercial-in-confidence, 'Quite frankly, that's nonsense.' We are entitled to have a much higher level of engagement with the parliament. While I accept what the minister is saying with regard to the direct negotiations right now, the way in which this has been handled is nothing short of appalling.

10:41 am

Photo of Pauline HansonPauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

I compliment Senator Patrick on bringing this issue before parliament. It is a very important issue to be spoken about. I raised the issue of the submarines in Senate estimates earlier this year. I am greatly horrified at the thought this government has continued with its secrecy over the purchase of French submarines that haven't been proven or tested and yet come with a combined price tag of possibly $100 billion or even as high as $200 billion if they're not adequate, if they don't work properly. Who knows? It could go a lot higher than $100 billion. Down the track, we might be looking at a cost as high as $200 billion. How do we know? With the Collins class, we had nothing but trouble. It cost us billions of dollars in ongoing costs. Let me remind the people. We're not buying a fleet of Commodores anymore, kids. This is $100 billion-plus.

It's taken a while for some of the facts to surface. I need to take my hat off to Senator Patrick for his tenacity on this matter. We know now the Adelaide submarine fleet cost breakdown is $50 billion for the build and a further $50 billion for sustainment. We also know the project is struggling to find qualified Australian workers to do this project. As the CEO of French firm Naval Group said, it's one thing to train people, but people confuse education with experience. That was his worry. Now this project needs 1,500 highly specialised workers by the end of the decade. If you're thinking this is a great employment opportunity, think again. At a price of $100 billion, that works out at over $66 million for each employee. Some of you might say that's it's a bit rough to divide the $100 billion by 1,500 employees, but that's all we've got to work with from this government. Where is the information?

What other options do we have? There are conventional subs from Germany and Japan that will cost us around $20 billion to build. No doubt the sustainment costs will be equal to that figure over their lifetime. But we also have nuclear subs that we should be discussing—off-the-shelf technology from countries like the United States or France, for that matter. But no; we want to reinvent the wheel and go with an unproven, untested new diesel-electric model that even the French didn't have confidence in when I spoke to them. If you are unaware, I went on a delegation to France earlier this year, in June, and I asked them about the submarines. I said, 'Have they been proven or tested?' They didn't answer my question. They just said that the companies that are dealing with it are very reliable companies. It was quite interesting to listen to Senator Carr today saying that those companies may not be around and might be sold to Italian companies. We don't know what's going to happen such a long period down the track and whether that is going to be the company. I think we need to have answers now.

The Australian people have had a gutful of government waste, and I can see the headlines now for 2032-34—whenever the first delivery is going to be. The papers will read, '$100 billion lemon'. The Prime Minister in 2032-34 will have demands placed on him or her for yet another royal commission as to how this disaster occurred. It's time that this government came clean and delivered answers to the questions being asked here today and during this parliament.

My suggestion would be to scrap the agreement—it hasn't been signed as yet with Naval Group Australia—and to start talking with the Germans and Japanese about off-the-shelf models we can both afford and have in the water in a few years, rather than in an unknown time frame. Let's make this quite clear: yes, we do—and I do—support all the defence services in having decent equipment for our security and around Australia. It is important that we do have submarines, especially with what is happening in the South China Sea and with the Chinese. But was this done in the last election as a shore-up for Christopher Pyne's seat in South Australia? Or anyone else's seat? It was an election issue. We have not heard about the true figures. And how much will it cost us to get out of the contract once signed? What will happen from the delivery of the first sub that is unsuitable, outdated or inferior? Do we buy the other 11 over the next 15 years, and at what cost?

These questions must be answered. Australians are sick and tired of governments having agreements with contractors and having yet another government come in and pull out of that contract. How do we know where Labor stand on this? Are Labor going to continue it? If this contract is signed prior to the next election, will Labor pull out of this contract? Is there a clause in there about it and how much is it going to cost the Australian people? We need to know this. And how much? As I said: how much is it going to cost us to get out of it if we have lemons delivered to us by 2032-34?

Another thing I must ask is: can South Australia deal with it? They're flat out now dealing with their companies and electricity. The whole state is falling into turmoil because they can't deliver decent electricity to run the state. And if they think that they're going to run this on renewables, I'll tell them absolutely different: it's not going to happen. So that's an important matter to discuss as well. Why I'm talking about the cost and the blowout is because didn't we have the same happen thing with the NBN? What it's cost us has completely blown out, we have an inferior product and it's not delivering what we need for the Australian people. We had this happen with the pink batts as well. That was an absolute blowout and a disaster, with lives lost. There was also the building schools program. And we had the Collins class submarines.

How many times have we seen contracts entered into that haven't been fully investigated to ensure that we have the right product at the right price? I'm sick of governments who have signed off on these to big-note themselves in the eyes of the public. There's no costing and they're not answerable to the public. They just change over: who's the next one? Then they'll actually have to put bandaid solutions over it.

The Centre Alliance and One Nation took a very measured approach in not supporting the corporate tax cuts, which were going to cost the taxpayers an extra $45 billion. But that was seven to eight years down the track. My reasoning was: could we afford it? I don't believe we can. We can't leave it to making decisions that far down the track. Where is the money going to come from for this? That's why I can't see the benefit of even $100 billion—and it may even be a lot more than that—for submarines that will possibly be inferior.

I call on the Labor Party: I want to know your policies. The people need to know what you intend to do about this if the contract is signed? Do you intend to pull out of it or do you intend to go ahead with it? And no matter what the costs might be, we have to know how much it's going to cost us to get out of this. We're talking about submarines being delivered in about 14 or 16 years down the track. The Barracuda submarine is diesel powered. These submarines don't perform as well as nuclear submarines do. I understand that we need to have nuclear plants here in Australia, but we are moving forward so fast that we need to talk about all this. Will we go nuclear? Will it be better for us in the expanse of oceans that we have around us? We need a submarine that is going to be up to doing the job at the time.

I fully support Senator Patrick calling this to the attention of the parliament. We need to ask these questions. We need to put pressure on the government because we're leading into an election. I want to know the answers and I'm sure the public of Australia want to know the truth.

10:50 am

Photo of Cory BernardiCory Bernardi (SA, Australian Conservatives) Share this | | Hansard source

It's worth reflecting that we're in this position and are having this discussion today because Labor failed to do anything about submarine procurement when they were in government. We know that was five or so years ago, but perhaps it was the most irresponsible decision because it has left perhaps the most irresponsible minister in the history of this place in charge of procuring some very important strategic weapons. We know Minister Pyne has not only a cavalier disregard for ministerial responsibilities but absolutely zero concern for the public purse. As long as it can deliver a political outcome for him, he doesn't care what the cost is. The political outcome of course was to save the seat of Sturt in the last election, so a promise was made for the procurement of tens of billions of dollars worth of submarines. There are enormous questions still to be answered.

As a relative neophyte to the submarine discussion, I have taken it upon myself to get substantial briefings from people who do know about submarines about what is important for Australia and what is value for money. I find it extraordinary that I could tell you pretty much what it would cost to buy a German submarine off the shelf and to have it built entirely in South Australia. That is relatively public information. Similarly, I could tell you what it would cost to buy a submarine and have it built in Australia by the Japanese designers.

Senator Patrick is asking a very legitimate question: what is the documentation and what is the early assessment cost of the decision the government has taken in this respect? It is the early cost. It's not secret. It doesn't talk about capacity. It's not going to tell us anything. It's just a headline figure. I can go to the Germans and buy an appropriate class of submarine—one of the suite of submarines that they manufacture—and have it built in South Australia. It's going to cost me $1 billion or $2 billion. Why is it that we're not entitled to have that information on behalf of the successful tenderer? I'll tell you why. Because how this determination took place stinks to high heaven. The contractual arrangements that have seen the decision made to use the French tenderers for construction of our submarine project stink to high heaven.

I have huge concerns about the design of these submarines—not simply because they are retrofitting a nuclear submarine with diesel; they're trying to make a submarine be all things in all circumstances. Anyone with a working knowledge of submarines knows that there are different subs for different purposes. Senator Hanson quite rightly talked about the potential for nuclear submarines. Nuclear submarines are wonderful things if you're operating in deep water and in a covert capacity for a very long time. They're not appropriate for a lot of the other work that Australia does in surveillance and counterintelligence and the other mission-ready stuff that takes place in relatively shallow waters. We know that nuclear submarines can go along at very high speeds for a very long period of time, but they also put out a signature that is sometimes more easily detected than a diesel-electric submarine running on batteries. We also know that diesel-electric submarines running on batteries can run at very high speeds for very short periods of time. But, once again, they have their limitations. There are horses for courses. Yet, we seem to have decided that we are going to build a new Seasprite that will be an amalgam of all of these different things and then end up with a perfect scenario.

I have grave concerns about it. I have grave concerns about how that was conceived. I have grave concerns about the break costs attached to this. We don't know what we're up against. I suspect that there is no dollar figure about the break cost in the event that we don't proceed down this path. It is, as in many contractual arrangements, led by people who have very little commercial understanding or very little commercial experience and are motivated more by electoral outcomes than good defence outcomes for the country. I suspect that this is a bottomless pit of compensation if we don't proceed down this path.

As a South Australian, I make no bones about the fact that I'm happy to see submarines and defence work take place in our state. It is very important for the future of our state. But, equally, as an Australian senator, as a taxpayer and as someone who is deeply concerned about the future of this country for every other Australian, I also want to see value for money. I am unconvinced that the submarine contract and procurement process is delivering Australians value for money. The headline figure was $50 billion for these submarines. And then there's another $50 billion, potentially, for ongoing maintenance and running costs. Senator Patrick has suggested, via the estimates process, that that figure could be virtually double that. If you really wanted to go down the path and procure a range of off-the-shelf German submarines and a few nuclear submarines, you could probably do the same for about $50 billion. I reckon that in the end I could probably tick a few boxes in that regard and say, 'Yes, this would help us here, here, here and here, and we'll have a better submarine fleet that is more reliable and more appropriate to the range of circumstances in which Australia engages in tactical undersea warfare and surveillance than is the case now.'

But, in the absence of information, the Australian people can't really make that judgement. In the absence of information, the Senate cannot really identify whether taxpayers have been given value for money, whether there has been some sort of misrepresentation, whether there has been some sort of malfeasance in the procurement process, or whether this was hastily cobbled together as a political fixer. It will have enormous implications, both financial and defence related, for decades to come.

So, with the limited knowledge that I have, both from a personal sense and point of view, but more importantly, with the information that has been provided to me by strategic briefings that I spent virtually a day undertaking with people who are experts in this matter—with due deference to someone who is not my natural political ally in Senator Patrick, but someone who does have a diligent approach to this matter and a great deal more technical expertise and specialist knowledge in this space than I ever will ever have, no matter how many briefings I get—I find myself absolutely in support of this motion for the production of documents. I don't buy, quite frankly, the statement that the minister has put forward today. But I do regret, and I put on the record, that this is the Minister for Foreign Affairs who is representing in a capacity. A brief would have been provided to her, and she has done her duty in this place. I have some questions about whether the minister should be held to account in the manner that some are proposing.

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

Senator Whish-Wilson?

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

I understand that Senator Bernardi has the call, but I was wondering if it would be possible for you to make a statement to the chamber that debate expires in seven minutes and fifty seconds and there are a number of senators who still haven't had a chance to speak.

Photo of Cory BernardiCory Bernardi (SA, Australian Conservatives) Share this | | Hansard source

I consider myself reminded of that, and that Senator Whish-Wilson would like to have a few words. In the interests of being a generous Senate citizen, I will put on the record that I'll be supporting Senator Patrick's motion should it come forward.

10:59 am

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

I will make sure I allow Senator Whish-Wilson a couple of minutes, as he's requested, at the end. I have a range of information here that I was planning to present if I'd had 20 minutes. Unfortunately, I only have about three minutes, so I'm just going to focus on the fact that the arguments that have been presented here today have contradicted themselves in their internal logic. Senator Carr started off really well with a whole bunch of information about government, executive government and the transparency required to the parliament. But he finished at about the same point that Senator Hanson and Senator Bernardi started off at, which was with a political point which actually underlines the motivation behind why they are supporting this motion.

Senator Carr said this was all about marginal seats and work occurring in marginal seats. Well, in South Australia, the submarines are being built in the seat of Port Adelaide, or what will be the seats of Hindmarsh and Spence, which happen to be two very safe Labor seats. Senator Bernardi has made the point that this is all about Mr Pyne protecting his own seat and letting a contract and yet has made the point, as have other senators, that there were other bids, for example from the Germans and the Japanese, who came out saying that their bids could be cheaper. If it was all about getting something built in South Australia, and if, as Senator Bernardi said, the minister doesn't care about the capability or the cost, then surely he would have taken the cheapest bid to get built in South Australia and then used the money for some other political purpose. What those comments highlight is that there is a political motivation behind the attacks on the government in this process when, as Senator Carr quite rightly pointed out before, the executive actually has the obligation in the national interest to conduct deliberations and to conduct negotiations with commercial partners in an environment where both parties can trust each other.

The very basis of the first principles review recommendation that Defence industry should be seen as a fundamental input to capability is so that we get value for money over the whole life cycle of a piece of equipment so that the Defence industry partner will be prepared to invest more in its facilities, in its people and in its processes, but that requires trust. If the information is just given willy-nilly to the public via the parliament because somebody decides that they would like that information—and I look through the Notice Paper here at the number of times that information has been requested not just for this program but also for a number of programs. Essentially what's being proposed here is government by a committee in the parliament, as opposed to the Westminster system, which is that we elect a government—an executive—to actually control the functions of government. If the taxpayers are unhappy, then, in a three-year cycle, you can have a change of government. That's how the Westminster system works. Senator Carr quite correctly highlighted that governments of all persuasions have, for reasons of confidentiality and maintaining that trust with a commercial partner, worked with information that has not been given in its entirety to either committees or to the whole parliament.

I do note that, where it is important for a committee representing the parliament to have information, committees like the Parliamentary Joint Committee on Intelligence and Security have received classified briefings so that, on behalf of the parliament, they can make decisions. But we see a similar request from people sitting on the cross bench—that they want to be part of that committee too. They're saying, 'Why should somebody have the information and not us?' It's about layers of trust, and some things are held by the executive. Many things are shared with committees like PJCIS, but there are many things which are not shared with the entire parliament for a very good reason.

Photo of Rex PatrickRex Patrick (SA, Centre Alliance) Share this | | Hansard source

This is not a sensitive number!

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

Senator Patrick is interjecting there saying that it's not a sensitive number, but he has made a number of requests of a similar format—seeking information that traditionally has been the domain of the executive to work on behalf of the Commonwealth.

There are other comments that have been made here about the Collins class and its capability and about nuclear submarines. Again, Collins class has actually been a good capability, and I'm on the record as saying that I think then Minister Beazley was poorly treated by history because the Collins class has appropriate support to make sure that through life it has come back to having four or five out of six submarines available. I was in Hawaii recently where we saw very good capability being delivered by HMAS Rankin. There are comments that Senator Hanson made about the South China Sea. She said that we need a submarine that can do all these things and yet has said we should buy one off the shelf from Europe. Everyone knows—the Germans have said, the Swedes have said, the Spanish when they're in competition have said and the French have said—that none of their existing designs would meet the purpose. All of those countries have said that they had to redesign their production boats in order to meet the objectives that the Australians had. So the arguments that have been presented here (a) show that it's a political attack and (b) demonstrate very clearly why we should never allow the executive to cede its role to the parliament when it comes to these kinds of information.

Photo of Kim CarrKim Carr (Victoria, Australian Labor Party, Shadow Minister for Innovation, Industry, Science and Research) Share this | | Hansard source

On a point of explanation: we are not supporting the foreshadowed motion.

11:05 am

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

This is a classic example, to use a submariner's term, of silent running. 'Silent running' is used to describe submarines in their stealth mode of operation; an operation deliberately designed to evade discovery and remove or eliminate superfluous noise. That is what this is. This doesn't just apply to a $200 billion submarine program; this applies to military spending in this country full stop. Silent running is a stealth mode of operation designed to evade discovery.

Two hundred billion dollars—that's 10 Gonskis. That's six National Disability Insurance Schemes. That's enough money to fund an infrastructure revolution around this country and fill the infrastructure gap that has been identified by this Senate. That's enough to fix homelessness in Australia. That's enough to do so many things we need for our nation, and we can't get simple answers to simple information requests. This is a critically important issue. The Greens will be supporting this motion today because it's so powerfully symbolic of what is wrong with the scrutiny around the military apparatus in this country.

If you want to read a good essay about this, I recommend you read James Brown's 'Firing line', which was published in 2016 in the Quarterly Essay, which I was lucky enough to provide a response to. It is about how we need whole new processes in this place to scrutinise not just military spending in parliament but the military industrial complex and a number of decision-making processes around how the executive makes decisions in sending ADF personnel to foreign deployments, especially to active deployment. We will be supporting this motion today. I'd like to have talked a lot more about exactly what the Greens think about the Future Submarine program but I don't have time.

Question agreed to.

11:08 am

Photo of Rex PatrickRex Patrick (SA, Centre Alliance) Share this | | Hansard source

I seek leave to move a motion relating to the minister's explanation and the enforcement of an order for the production of documents.

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

Leave is not granted, Senator Patrick.

Photo of Rex PatrickRex Patrick (SA, Centre Alliance) Share this | | Hansard source

Pursuant to contingent notice of motion, I move—

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

Senator Patrick, please resume your seat. Senator Cormann.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | | Hansard source

If I might assist the Senate, the government is prepared to give leave.

Photo of Rex PatrickRex Patrick (SA, Centre Alliance) Share this | | Hansard source

by leave—I move:


The Senate resolves that until such time as the Senate by resolution is satisfied that the order for the production of documents relating to the submarine project (No. 862) has been complied with, the Minister representing the Minister for Defence Industry shall be prohibited from sitting in the front bench seats reserved for Ministers and be allocated a seat by the President in another seat.

Photo of Scott RyanScott Ryan (President) Share this | | Hansard source

The question is that the motion moved by Senator Patrick relating to seating arrangements in the chamber be agreed to.