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Monday, 21 November 2011
Page: 13092


Mr HUSIC (ChifleyGovernment Whip) (16:15): I am pleased to speak on the Defence Trade Controls Bill 2011. As the Minister for Defence Materiel indicated in his second reading speech to the House, the legislation seeks to achieve some extremely important outcomes, notably helping strengthen our alliance with the US and the relationship between our defence industries; improving interoperability of the Australian and US armed forces; helping deliver equipment to our troops faster and cheaper; providing opportunities for the defence industry to win work in the US defence market; and enhancing Australia's defence export controls to bring them into line with international best practice.

The primary path to achieving these outcomes flows from the implementation of a treaty signed four years ago between the Australian and US governments. In the interests of precision, the title of the treaty is the Treaty between the Government of Australia and the Government of the United States of America concerning Defense Trade Cooperation. This helps provide a tremendously useful platform from which to lift two-way trade in defence items between what are known as trusted communities and without relying continually on export licences. While the treaty was signed four years ago, it has obviously taken time for the parliaments of our respective nations to ratify the document and for it to go through their respective parliaments. It was only in September last year that the US Senate recommended ratification of the treaty. What stands out for me within these arrangements announced by the minister are three points. Firstly, it cuts bureaucracy and red tape impacting on local Australian defence industry operators, seeking to lift the amount of work and services they can undertake for the US. Secondly, in doing this it will also ensure that existing legislative export control measures are strengthened. But ultimately the biggest benefit will be the way it lifts defence cooperation between our two countries.

We have had great reason to celebrate this cooperation in the previous week, with the visit of the President of the United States in this year, the 60th anniversary of the signing of the ANZUS Treaty. But we strengthen our commitment together year in year out in a number of ways. For example, it is worth noting that around half of Australia's war-fighting assets are sourced from the US and, on top of this, we are looking to replace or upgrade up to 85 per cent of our military equipment over the next 15 years. So there is a great degree of work happening between our two countries, and there is scope for more.

It has been recognised for many years now that Australian industry has played an important role in helping the ADF meet its critical objectives for this country. In fact about 20 years ago my predecessor in this place spearheaded a landmark review into defence industry policy, which he released in November 1992. I tracked it down in the Parliamentary Library. In that work, Defence policy and industry: report to the Minister for Defence, then Parliamentary Secretary Price likened the defence industry, in its support of Australia's Army, Navy and Air Force, to the important fourth arm of our country's defence. At that point in the report he noted that the level of Australian industry involvement in major capital equipment projects within defence under the Hawke-Keating government had almost trebled from about $476 million to $1.4 billion. It was a tremendous reflection on the confidence in the capacity and capability of our local defence industry, and that confidence continues today.

Take, for example, our budget for sustainment, where our spend is set to grow from around $5.3 billion this financial year to over $6.1 billion in 2014-15. Around 70 per cent of that figure will be spent right here in Australia strengthening employment, fuelling scope for innovation, providing commercial benefit for local industry. It is worth noting that a strong defence industry here that is providing and fuelling that innovation in the commercialisation phase, and looking for ways to provide new product, goods and services, spreads to the broader economy, with equipment that may have had in its genesis a defence intent then being used for other commercial purposes. Within the scope of this bill, there are obviously particular protections in terms of the use of technology, but I take this opportunity to reflect on the fact that defence industry suppliers here, through their work within the sector, have enormous opportunity to then provide other goods and services that will spread into the broader economy.

Talking of sustainment, just this year the government announced details of some significant projects—a $100 million contract with General Dynamics Land Systems-Australia to maintain the Abrams tanks and ASLAVs; a $300 million contract extension with BAE Systems Australia and Lockheed Martin to maintain the Jindalee Operational Radar Network; a $70 million contract with Raytheon Australia to maintain tactical data radio systems; and a $20 million contract with CAE Australia to provide training for aircrew on our air-to-air refuelling aircraft. Recently, Minister Clare announced the release of a $300 million tender for the first of Navy's group maintenance contracts. These contracts are being provided to companies that are doing some really fantastic work. For example, an Australian company that has been successful in the US defence markets is shipbuilder Austal. Austal built the Navy's current Armidale class patrol boats based in Darwin. The company is based in Western Australia but has set up operations in the US to build a shipyard in Mobile, Alabama. It has a $1.6 billion contract to build 10 Littoral combat ships for the US Navy. The contract was awarded in November 2008.

The government is also helping defence companies access global markets through the Global Supply Chain Program. Around $400 million in contracts have been awarded to Australian defence industry suppliers through the Global Supply Chain Program, and 90 per cent of that money has gone to Australian SMEs. This is a tremendous mark of confidence in our local industry. These are big projects and major opportunities. They are a demonstration of our belief in the great capacity and value of local industry.

While we have a vibrant local industry with work to sustain and grow its capabilities, we can also look for improvement. The bill before the House seeks to do just that. Currently, when Australian companies need to access defence items or technologies from the US, they have to apply for an export licence from the US Department of State in accordance with what is known as the ITAR—International Traffic in Arms Regulations—system. No-one would doubt that ITAR is critical for a range of important reasons, but the current arrangements can be improved, and that is what is being proposed. The legislation tackles the need for individual licences to be mandatory for each individual export application. One can easily appreciate that having to regularly apply for individual licences adds up in cost and adds up in time. Under what is being proposed here, the treaty will lift the requirement for individual licences and provide for licence-free movement of eligible defence articles within what will become known as 'approved Australian-US communities'. These communities will consist of government agencies, companies approved as community members and their eligible employees. An approval of an applicant for membership of the Australian community will involve the consideration of a range of factors, including, for example—and these are important—convictions for export control offences, the level of foreign ownership or control, and prejudice to security, defence or international relations for Australia.

For the ADF, the treaty will improve interoperability with US armed forces by way of sharing common equipment and spares during exercises and operations. There are benefits for Australian industries but they will, as I mentioned earlier, need to comply with security requirements to ensure the protection of technology, particularly US technology, that they access. Offences will also exist for community members who do not comply. So, while these are understandable, necessary measures, there are significant opportunities for what will become known as Australian community members, with considerable potential to access greater investment opportunities.

I also commend the government for the extensive consultation process with industry, from the biggest companies to the smallest firms whose innovation and know-how have seen them score significant work. That consultation process, managed by Ken Peacock AM, captured a range of views, including the requirement to help, for example, SMEs who are aiming to become approved community members. That was picked up in some of the work done here and it is reflected in this bill. These industries can certainly access opportunities.

I was particularly pleased to see that industry will be able to access better information on the goods that are within the scope of the treaty and that will help them plan and develop lead times for potential investment and procurement bids. This will also be backed up by our Department of Defence, which will be taking steps to ensure it can help companies comply. Finally, I commend the decision to waive any charges to industry for approvals, registrations or security clearances associated with the bill. I conclude on the point that, as much as we are freeing up red tape, we are taking seriously our responsibility to ensure that security provisions are put in place—requirements to be satisfied by an employee or contractor for Australian community membership, record-keeping compliance and reporting requirements—to ensure adequate oversight in that process. This bill will build on the solid legislative export control measures that exist. As the minister indicated in his second reading speech, these measures aim to ensure the responsible export of defence and strategic goods, and I wholeheartedly commend the bill to the House.