Wednesday, 17 March 2021
Questions without Notice
My question is to the acting Minister for Defence, Senator Payne. Defence minister Linda Reynolds promised last year to secure a contracted requirement of 60 per cent minimum local content for the Future Submarines program. Can the acting Minister for Defence confirm that this contractual agreement has still not been finalised, and when will it be finalised?
I thank Senator Gallacher for his question. The government expects defence industry doing business with Australia to meet their commitments to manage their costs and to deliver projects on time and according to our specifications. That will not be done at the expense of Australian jobs and Australian industry. In the case of the attack-class submarine, we expect that Naval Group's commitment to spend a minimum 60 per cent of their contract value in Australia will be finalised as a matter of priority.
As we come out of the COVID-19 pandemic, it has never been more important for the government to back in Australian industry, and that is what we are going to do. We have been very clear that we will not agree to provisions in the strategic partnering agreement that are not meaningful and measurable over the long duration of the program or that dilute the protections we currently have. The government is a strong client and will maintain a fit-for-purpose agreement for decades to come. I'm advised that Defence and Naval Group have made progress on the agreement, with details being worked through to finalise the amendments to the strategic partnering agreement.
The chief executive of the Australian Industry and Defence Network, Mr Brent Clark, has said that the agreement 'will go to the very heart of how Australian industry is to be brought into the supply chain for the submarine' and that it needs to be 'made public to ensure transparency'. Is Mr Clark wrong?
I haven't seen the specific remarks of Mr Clark, so I will take those at face value from Senator Gallacher, of course. I want to be clear about the amendments to the strategic partnering agreement, though, because they are detailed provisions that apply to Naval Group's achievement of the commitment, including both remedies and incentives. As with all provisions in the strategic partnering agreement and, indeed, other major defence contracts, as Senator Gallacher is well aware from his extended period of time on committees that deal with these matters in the parliament, the specifics of these amendments will remain commercially sensitive. Similar to our other projects, AIC performance will remain subject to parliamentary scrutiny through the Senate estimates process and the program will remain the subject, as it has been, of ongoing, regular reviews by the ANAO.
The acting Minister for Defence, Senator Payne, has previously argued against a local minimum content requirement in contracts for the future attack-class submarines, asserting it would create a ceiling, not a floor, on local content. Is this why the acting minister refuses to disclose details of any Australian content requirement, as reported in today's Australian Financial Review?
The answer is no. I have been clear in relation to the finalisation of the 60 per cent AIC commitment and the nature of the protection of the provisions in terms of the commercial sensitivity of those—and they are matters, as I said, of which Senator Gallacher is well aware.
In concluding my answer, I also seek the indulgence of the Senate to refer to the members of the National Rural Women's Coalition muster, who are here in the gallery in the Senate chamber today. From Christmas Island to Pakenham, Hamilton, Noosa shire, Weipa, Wagga Wagga and multiple locations in between, I welcome them to the Senate.