Senate debates

Tuesday, 23 February 2021


Defence Procurement; Order for the Production of Documents

3:03 pm

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

In accordance with standing order 164, I'm seeking an explanation from the Minister for Defence as to why she has not responded to the Senate's order of 11 November 2020 to provide documents to the Senate economics committee.

Photo of Linda ReynoldsLinda Reynolds (WA, Liberal Party, Minister for Defence) Share this | | Hansard source

I thank Senator Patrick for raising this issue with me earlier. In relation to this, I can confirm that we have complied with that order. However, I did receive further correspondence from Senator Gallacher in response to my letter, in relation to access to these documents. I received that correspondence on 19 February, and I am in the process of responding to that.

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

I move:

That the Senate take note of the minister's explanation.

Just so the chamber is very clear, the chamber has asked for documents to be returned to the Senate economics committee. That's very important, because rather than asking for them to come to the Senate table, where they are public, responsibly the committee has asked for these documents to be sent to the committee itself; thereby, they can be managed in terms of their confidentiality. Unfortunately, all that has been provided to the committee is a series of redacted documents that do not let the committee go to the fundamental task required of it by the Senate, to examine Australia's sovereign naval shipbuilding capability. So we end up with a problem.

I'll just lay out what the problem is. This is a really important issue, not just for the inquiry into naval shipbuilding but for the Senate more generally. The proposition that has been put forward by Defence in advancing a case for public interest immunity is that they have signed a contract with Naval Group and other providers—BAE, Luerssen and so forth—and that those contracts have confidentiality conditions. Because we have confidentiality conditions in these contracts, they are of the view that they cannot provide them to the Senate, on the basis that, if they do so, it may undermine the future provision of information.

Unfortunately, what the department hasn't told you is that they correctly, when they signed these contracts, included clauses related to confidentiality that included words like this—that they cannot disclose information except as otherwise required by law. Just because Defence enter into a contract that involves confidentiality—and I know that that's important; you need to have confidentiality in these projects so that Defence take care of information and don't hand it over to entities that have no business seeing it; they take care of it properly; they put it in safes. They also reciprocate: they require Naval Group to make sure they look after our information as well. That is proper. But you cannot have a clause in a contract oust the jurisdiction of the Senate in its oversight role, just as it would be preposterous if Defence were to claim that a court couldn't get access to documents, that a court couldn't subpoena documents, because there was something written in a statute.

The Senate's powers to obtain documents to carry out its oversight role come from section 49 of our Constitution, backed up in the Parliamentary Privileges Act. There can be no question that the Senate has power at law to obtain documents. It is not possible for the Department of Defence to sign a contract with a commercial party to oust that jurisdiction. It simply cannot happen. Unfortunately, that's the proposition that has been presented to the Senate. This time around, it's about a shipbuilding contract, but the next time around it could be something that other senators are inquiring into, and they may have a department turn around and say, 'We can't give it to the Senate; there's a confidentiality clause in the contract.' People can clearly appreciate that that would affect us in the execution of our role and our responsibilities, one of which is, of course, to review, examine, modify and pass legislation and the other, very importantly, is to scrutinise the executive.

Again, it's written into the contracts. If I look at the Department of Finance's advice in relation to confidentiality of contracts, they make it very clear that officials need to be mindful of things like FOI. I know; I am in the AAT in relation to this matter now. Again, if a contract says something is confidential, that is quite legitimate, but, to the extent that a statute, something that the parliament commands, grants a citizen a right to access, then the contract is void to the extent that it interferes with that statute right. Of course, that doesn't mean you just come in and ask for documents under FOI and they will be given to you. That's not the case, because the FOI Act provides certain protections in relation to confidentiality. But it doesn't rely on the contract. Right now, in the Senate Economics References Committee, we can't do our job looking into shipbuilding, and it's a really important job. I'll just look at one of the programs that we are examining: the submarine project. The history is that, back in 2009, it was identified in the Defence Capability Plan and the defence white paper that we needed to build 12 new submarines. There was a very rough estimate of budget. Between 2009 and 2015, a period that expanded across two governments—the Rudd-Gillard-Rudd government and also the Abbott-Turnbull government—$214 million was allocated to the Department of Defence to examine the Future Submarine project. They were to look at it, work out what ought to be in it and what ought to be out of it, and, presumably, to build up some reasonable costs. They came to the conclusion in about 2015—and they gave evidence to a Senate estimates committee—that the project would cost $50 billion out turned. That would include acquisition and sustainment.

We then went through a CEP, a competitive evaluation process. Out of that process we selected Naval Group as the partner to build our future submarines, but in there, somehow, the cost of the submarine went from an estimated $50 billion out turned for sustainment and acquisition to $89 billion out turned. I am going to ask officials about this at the next estimates. How do you go from a proposition that something will cost $50 billion out turned to $89 billion out turned without anyone even raising a question? No-one even said, 'How did that happen across the CEP? How did we get it so wrong? We spent $214 million—that was allocated in the lead-up to the CEP to work out exactly what the landscape was. Unfortunately, there was this huge error. Now we see $39 thousand million increase in the price of the Future Submarine project. Defence will argue that it's not a blowout because it was approved by government. What they've said is: 'It's your fault.' Somehow something went up $39 thousand million and no-one bothered to raise the questions: 'Can that be right? Can we have a submarine fleet suddenly go up $39 thousand million?' That increase is $2.8 million per day for 38 years. That's how much that increase was. I would have thought someone would have said, 'Hey, what happened? How did we get such a big increase?' But, no, the government just signed off on that project. They were caught up in a pre-election frenzy and wanted to do good, but, in fact, it looks like they've done harm. Since that time, we know that the project has had problems. This is one of the things that the economics committee is examining: how much Australian industry involvement is taking place. How are we building our sovereign naval shipbuilding capability in relation to this particular contract?

Defence resisted an OPD, but under FOI I got access to the plans of Naval Group as they went forward and made their tender to the Australian government about what it was that they thought they could do with Australian industry. It included things like partnering with ASC, setting up programs in schools and setting up capability centres. It included all manner of things. This committee has started to examine exactly what was offered versus what was contracted. They're the exact documents we are looking to obtain. What did the companies that won the job offer to do here in Australia, and what has been done? What has been contracted? They're very important issues.

Very unusually, the minister stood up in question time today and, in answer to the first question, said, 'I'm very frustrated with Naval Group'—because we are not getting what we should get from that contract. We have a committee of the Senate looking into this, and the Department of Defence is refusing to hand over documents. To be fair to the minister, she has, as she alluded to, sought to work out a way to grant access to those documents. But this has been going on for almost a year. If the Senate is to do its job properly, it has to be properly informed and it has to be able to receive information in a timely fashion. Otherwise we can pack up and go home. Otherwise we can operate remotely and simply press a button on our office walls whenever there's a vote. If we can't do the oversight role properly, we ought not be here. It's a very serious issue that I'm talking about. It's not just about naval shipbuilding; it's about the Senate's capacity to do the job that it is required to do under the Australian Constitution. We were granted powers to do those jobs for very good reason. I said this at a Senate committee that was examining certain elements of the department's refusal to provide the Senate with information. I think we're very close to a privileges resolution. I think we're very, very close because I can't see how any one of us could watch a committee stand still for six months waiting for the executive to respond favourably to provide it with the information it needs to do its inquiry. If that's not fettering the ability of a committee to do its work then I don't know what is.

Minister Birmingham has weighed in on this issue. It's very important. One day, people on the government side of the chamber will be in opposition and they will be wanting to do their job properly. I said in a speech—it might have been in 2019—that the Senate has lost its mojo. It disheartens me to say that. I watched the House of Commons, in seeking to get access to documents from Facebook, arrest someone in a hotel, bring them back to the Commons and say to them: 'You can't leave. If you don't hand over the documents we're putting you in a cell'. That's mojo. We in this place, on a repetitive basis, ask for documents to be provided and simply ignore the executive when they fail to deliver.

I, for one, am not going to let that happen, because I take my role as a senator very, very seriously. We are put here by the people of our respective states to do a proper job—and that job involves keeping an eye on the executive, scrutinising the executive. I know scrutiny is to the Prime Minister as kryptonite is to Superman. I know he doesn't like it very much. But that is our job. We are empowered to do it and we should do it. We should not accept a claim by the executive that we cannot have access to information to do our job. We are tasked to do that and we should do it. We need the Department of Defence to comply in this particular instance, and the minister needs to direct them to do so.

3:19 pm

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Minister for Finance) Share this | | Hansard source

I rise only very briefly on this matter but I do wish to make a contribution to it. The scrutiny functions that the parliament undertakes—in particular, the scrutiny functions that this Senate, as the house of review, undertakes in this parliament—are of crucial importance and something that I hold in very high regard and of great import to the functioning of the parliament and of the government and, indeed, to our entire system of government. I acknowledge the important role that individual senators play in this place in driving levels of scrutiny over government decisions and particularly important policy decisions such as those that relate to the procurement of our future defence assets.

I do note that there are also a few things that are perhaps more sensitive in terms of their content than documents that relate to the type of assets our defence forces are procuring for the future. Those sorts of assets are obviously of high degrees of sensitivity and do need careful consideration in the approaches that are taken to their scrutiny. I have been pleased to try to work with Senator Patrick, since my appointment as Leader of the Government in the Senate, in relation to some of his concerns that he has expressed about access to some of the Defence procurement documents. I acknowledge that he is genuinely seeking to scrutinise some of the information within those documents.

I do think that a significant breakthrough was made, shortly prior to this fortnight of parliamentary sittings, when the Minister for Defence, following further work with her department, offered the members of the Senate economics committee access to those documents that had been previously redacted for a number of reasons. I think it is notable that a very significant breakthrough occurred. It was a very significant step by Defence to provide access to those tender and procurement related documents for significant defence assets in naval infrastructure, to do so in an unredacted format and to be available to be questioned in confidence about those documents. I do encourage members of the Senate economics committee to engage with Defence through the process that Defence has offered in that regard, to at least do so in good faith initially. If there are dissatisfactions following that engagement, then, by all means, bring those concerns back to the government. But Defence, I think, has made a very significant step in transparency and in engagement with this chamber, in particular with senators on the Senate economics committee. I would encourage them to take that up and to use the opportunity that has been provided.

3:22 pm

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

I too rise to take note of the response of Senator Reynolds. I do endorse the comments made by Senator Birmingham. I think he has been a circuit breaker in what's been an extremely unusual and vexed inquiry. I've done a couple of inquiries since I've been here. As I languished on the backbench, I learnt all about Senate standing order procedures and inquiries, but I've never run into this level of intransigence. I honestly have no political perspective in the pursuit of this inquiry. To me, it looks straight up and down: scrutinise expenditure, plans and progress in an extremely important area of defence policy.

I had the opportunity of opening up a hearing quite recently, and I said to the secretary of Defence:

I will start for a few moments. I'm not looking at this from any particular perspective, other than that the Senate gave this committee a reference. You would be familiar with the terms of that reference. Amongst the terms of reference is the ongoing examination of contracts and scrutiny of expenditure. The department's performance, when we have requested information, has been nothing short of abysmal. You have redacted publicly available information and sent it to us. It's almost like you have a giant forefinger up to the operation of this committee. It has now been to the Senate to get orders. I accept that you have a case on your commercial confidentiality position and all the rest of it, but, in the ordinary course of this committee's activity, I, as the chair, personally feel—and I'm sure there are other members of the committee who feel the same way—that Defence has been absolutely obtuse, arrogant, dismissive and contemptuous of the work of a Senate committee duly given a reference by the Senate.

It was a pretty strong opening line to a departmental secretary, but I don't resile from it, because the people who are resourcing the Senate committee, the good people of the secretariat, were becoming absolutely flabbergasted at the information that was given to us. The way it was presented to us was almost something that had never been seen before—and I have done a little bit of work with Defence.

I chaired the Foreign Affairs, Defence and Trade References Committee, and we went through some exceedingly contentious private issues and dealt with an enormous amount of stuff that may have needed to be visible in camera. It appears, though, that all of those sorts of protocols and procedures have been forgotten by Defence. In the Veterans' Affairs area we had a whole stack of in camera documents made available to senators. When I say 'senators', I don't mean just to voting senators, as they've tried to prescribe here. Over a period of time you'd sign in, you'd be able to access the information—you couldn't copy it or take it away but you could view it—form your opinion and come back and make your contribution. I well remember Senator Fawcett being exceedingly diligent in that area. Personally, I have only to read one tale of distress; I don't need to read a hundred. But there were other senators—Senator Lambie, Senator Fawcett—who went in camera and went through the whole lot. This is the really interesting thing: the end result was that we produced a report which had 26 recommendations, and the government accepted every one of them. The Department of Veterans' Affairs actually put money behind some of the initiatives that were suggested. So good work can come out of difficult areas. But not providing information to people is absolutely not conducive to a great outcome.

Senator Reynolds has left the chamber, and basically that's why I need to put on the record that she had written to me setting out a pathway forward, and that I had written back to her and she was responding to that. The problem with Senator Birmingham's and Senator Reynolds's responses basically is that this has twice been the subject of a Senate order for the production of documents. Senator Patrick is quite entitled to look for a Privileges outcome here. I foreshadowed that this type of activity could occur every sitting day until we got resolution. I foreshadowed it to the Department of Defence and clearly, obviously, as it was a public hearing, to the minister. What the minister sought to do was to say: 'Senators will be able to view the documents at a secure location in Canberra. This will be available to voting members of the committee only.' Clearly, that condition is a breach of the standing orders. All members of the Senate are participating members of all committees and therefore can go and participate in all inquiries. To say it's available to voting members only is wrong; it's against standing orders. That has been clearly pointed out. This request contravenes standing order 25(7)(c), which states:

Participating members may participate in hearings of evidence and deliberations of the committees, and have all the rights of members of committees, but may not vote on any questions before the committees.

So they can get all the information; they just can't vote on the outcome of it.

We're not quite as close as Senator Birmingham alleges, but I do say that he has intervened to good measure a couple of times. The nut of it all is this: I said to our committee secretary, 'Can you reach out to the Department of Defence and say: "We're not unique. This is a reference. You can see the terms of reference. These are requests. You know the standing orders. Can we get somewhere closer? Is there an area where we can start seeing a regular flow of information to allow the committee to do its work?"' You've got to allow the committee to do its work. If you need to argue commercial-in-confidence, you'll either win or lose that, and you're losing it. Senator Patrick has come to the committee and put on the table freedom-of-information outcomes which clearly say that Defence was wrong in hiding the stuff from the committee. There are no ifs and buts about it. Some of the freedom-of-information stuff that he's got actually state that they should be made available to the committee. So we've been passing the parcel in a very difficult area. I don't know whether this intransigence and reluctance to cooperate with the Senate committee is in the ministerial office or whether it's in Defence.

I fired a shot over Secretary Moriarty's bow and said: 'I reckon you're giving us a giant forefinger. Tell us why you're not, and improve your performance.' This doesn't stop in the references committee; all it does is transfer it to estimates, and then you'll have another whole heap of departmental officers working away on questions on notice and the like. Why can't we have what the Constitution says? There's a parliament and there's an executive, and this Senate gave us the job of scrutinising performance capability and money. Where's the big issue here? Every time they raise an issue, Senator Patrick trumps them with this: 'By the way, I got that under freedom of information, and it says it shouldn't have been classified in the first place.'

I won't take up any more of the Senate's time, but I think it's important that we allow our Senate committees to do what they do best: scrutinise expenditure. The Audit Office will come down eventually and say, 'God Almighty, what happened here?' but in the meantime we might be able to put someone on the pathway to good outcomes.

Question agreed to.