Wednesday, 3 April 2019
Questions without Notice
My question is for the minister representing the Minister for Defence Industry, Senator Payne, and relates to local content in the Future Submarine program. Estimates questions on notice have revealed the following: a total of $1.9 billion in contracts has been awarded for the Future Submarine project; Naval Group have been awarded two substantive contracts, totalling just over $1 billion, for design work to be predominantly carried out in France; and Australian entities have been awarded $834 million in contracts, but Defence has advised that only 67 per cent of that money is being spent on local content. We have $1.9 billion in contracts that have been awarded by the Future Submarine program, but only $569 million has been spent on local content. That's about 30 per cent. What explanation does the government have for dropping this figure from the original 90 per cent, as announced by Minister Pyne, to 60 per cent and now to a mere 30 per cent for local content?
I thank Senator Patrick for his question and some advice of the question. As Senator Patrick is well aware—in fact, perhaps he is better aware than most in the chamber, given his own professional experience, one would hope—this is a very long-term project. He knows that. This is a project which this government took on after those opposite completely abrogated their responsibility to ensure that Australia had the submarine capability it required to do the jobs that we asked the ADF to do. Our commitment to Australian industry engagement and industry content in the Attack class submarine program is absolutely steadfast.
Senator Patrick used a couple of figures in his question. He referred to a 90 per cent figure, which, as I recall, was actually used by a then DCNS official and not initiated by Minister Pyne. The involvement of Australian industry in the Attack class submarine program is critically important to its sovereign construction, its operation and the sustainment of the Attack class submarine fleet. That's the premise which we have operated on from the very beginning of this process. I have told this chamber, on a number of occasions and in the various incarnations of my responsibility, that we will not put a ceiling on local content because we want to absolutely maximise it.
We've made a variety of major announcements on how we're securing work in Australia, including the signing of the strategic partnering agreement; the signing of the design contract; the signing of a framework agreement between Naval Group Australia and ASC, identifying ways to collaborate with each other to support Australia's sovereign submarine capability; the establishment of the Naval Shipbuilding College in South Australia, to ensure that we've got the workers we need to get the jobs done; the transition of 270 jobs— (Time expired)
The department has given guidance as to why the number is so low at this stage, suggesting we don't have the know-why or the know-how at this early stage. However, we've got plenty of know-how and know-why, and they're in ASC in Adelaide. Unfortunately, we know that DCNS offered to partner with ASC in this build, in this program. That has been conceded by Defence. Do you accept that, when you carve them out, you've made a multibillion-dollar mistake in terms of local content?
I absolutely do not accept the premise of Senator Patrick's question. I was just about to say in my previous answer that we're transitioning 270 submarine design jobs from France to Australia. We've announced that Laing O'Rourke is the managing contractor to construct a purpose-built submarine yard at Osborne North, creating hundreds of construction jobs. We've announced that Lockheed Martin Australia will design and integrate the $700 million combat system for the Attack class, creating around 200 Australian jobs.
We are still in the very early phases of this. But, in terms of activities that are going to be located here, we have, just for starters: detailed design; product engineering; design authority for sustainment; land based integration and testing; sea based integration and testing; construction of the submarine construction yard, which I referred to; construction of the 12 boats themselves; construction of the support infrastructure—ranges, wharves and training; and development of a sovereign supply chain to support the fleet, including ongoing sustainment of the fleet such as upkeep, updates and upgrades. We are absolutely committed to maximising Australian industry content. (Time expired)
In 2016, yes, Mr Costello did say 90 per cent, but Minister Pyne repeated that to the South Australian electorate. We've now moved from 90 per cent. He said 60 per cent in a radio interview in Adelaide. You have conceded that you haven't put any maximums. We're only at 30 per cent. Minister, how low are you going to let this go?
It strikes me as passing strange that, as far as I can tell, the only people in Australia who are talking down the development of the Attack class submarine are senators from South Australia like Senator Patrick and occasionally those opposite, when they feel a twinge of guilt about what they completely failed to do for the entire term of their government.
Our job, our task and our commitment is to maximise Australian content and to maximise Australian industry engagement. It is what I have prosecuted, it is what Minister Pyne has prosecuted, and it is what my colleague Senator Linda Reynolds will continue to do as the defence industry minister.