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ESTIMATES COMMITTEE B - 11/09/1991 - DEPARTMENT OF DEFENCE - Program 6-ACQUISITION AND LOGISTICS - Subprogram 6.1-Major capital equipment

SENATOR MACGIBBON -I see that the new submarine program is on budget, on time and all other good things. Can we have some details of the contract? There was a fixed price contract. What were the limits of that fixed price? I knew it had an escalation clause for materials and labour, but does it cover 100 per cent of the submarine?

CDRE DECHAINEUX -The essence of the contract, as you say, is fixed price. There are some provisional price elements contained within the contract.

SENATOR MACGIBBON -What are they?

CDRE DECHAINEUX -They relate essentially to insurance, inspection test and trials, some management reserve, combat system set to work spares--

SENATOR MACGIBBON -What was that?

CDRE DECHAINEUX -Combat system set to work spares, not the combat system itself.

SENATOR MACGIBBON -I see; spare parts. What about these anechoic tiles that are going to be added to the hull; were they part of the original contract or are they an add-on?

CDRE DECHAINEUX -To the best of my knowledge, they are a recent development and have been included in the contract recently.

SENATOR MACGIBBON -They are hardly a recent development per se; they might be recent with respect to the Collins.

CDRE DECHAINEUX -With respect to this particular contract.

SENATOR MACGIBBON -What sort of technical risk are we exposed to there? I do not think the Swedes have ever put those tiles on a submarine, have they?

SENATOR ROBERT RAY -It is a fairly sensitive area. We are developing them ourselves, I understand, at DSTO. They are showing remarkable properties at this stage. They are looking good.

SENATOR MACGIBBON -Superadhesive, are they?

SENATOR ROBERT RAY -Yes, they have got all those qualities. I think I would rather not go into heaps of details now but I am happy to have you briefed privately.

SENATOR MACGIBBON -I will take you up on that. Concerning the ANZAC ship design, there has been some comment in the press that EDG replacements will be a development of the ANZAC ship. Is there any information further than that available at this point?

VICE-ADM. BEAUMONT -No, what we have actually said is that there will be a derivative of the ANZAC ship design concept, which is a modular package.

SENATOR MACGIBBON -That could mean anything. That is not worth pursuing.

Concerning the minehunter program, at the end of the paragraph it said, ` Ensure that the two current prototypes are equipped with an effective minehunting system'. Will the two current prototypes be put into service as minehunters if the equipment is suitable or does that only mean for trials purposes?

VICE-ADM. BEAUMONT -They are to be used for training purposes and also they will be operational for inshore work.

SENATOR MACGIBBON -On the Army projects there does not seem to be any mention here of the LAV, but I would just like to go through the selection program if I could. On 10 October 1989 we made some inquiries and I asked whether Santa Claus arrived with the money that provided the $25m for the purchase of the original 9 or 15 vehicles. It transpired that the Minister liked them and that is how they got into the program.

SENATOR ROBERT RAY -Do you want to specify which Minister?

SENATOR MACGIBBON -It was not you, Minister, it was a more impulsive shopper. My concern at the time was that this impulsive purchase would lead on to a longer term buy, and sadly that looks like it has come to pass. I would like to ask in the first instance why no other vehicles were trialled? I am not disputing the need for wheeled vehicles in the Australian Army but why was no other vehicle tested? There are a range of vehicles available in production currently around the world.

MAJOR-GEN. JEFFERY -A number of other vehicles were indeed trialled by the United State Marine Corps, 8 of them. They were vehicles from the UK, from Brazil, from America and from other countries. Those trial reports in great detail were made available to the Australian Defence Force and the Australian Army for our benefit. The trials carried out by the United States Marine Corps were very much akin to those that we would have run ourselves if we had been going through a comprehensive selection process and we were very satisfied with the data that came from that particular trial.

SENATOR MACGIBBON -That must have been a while ago because the vehicle originally was the Swiss Piranha that was modified and built in Canada in 1981 . And from memory the Marine Corps order was in about 1985, so the trials must have taken place in 1983-84.

MAJOR-GEN. JEFFERY -The trials took place in 1982 and from that a number of vehicles were further trialled by the Marine Corps. But since those trials and since the trials that we did ourselves on the LAV, there has been no introduction into service globally of any new compatible wheeled armoured fighting vehicle that would meet our needs.

SENATOR MACGIBBON -We have done trials in Australia with them over the last 12 to 18 months. Who carried those out?

MAJOR-GEN. JEFFERY -The 2nd Cavalry Regiment carried out hot-dry and hot-wet trials from June last year till April this year in Northern Australia.

SENATOR MACGIBBON -And those trials have now been completed?

MAJOR-GEN. JEFFERY -Those trials are now complete.

SENATOR MACGIBBON -Is it possible for the Committee to see the report?

MAJOR-GEN. JEFFERY -I would have to defer to the Minister.

SENATOR ROBERT RAY -I give a qualified yes. I would like to have it double checked but it looks like that is okay.

SENATOR MACGIBBON -The vehicle, as I understand it, has got an all-up weight of 12,800 kilograms and each axle has a load of 3,400 kilograms on it, is that correct?

MAJOR-GEN. JEFFERY -Mr Chairman, I could not answer that detail. The all-up weight of the vehicle is about 12.8 tonnes with a payload of about 2,000 kilograms.

SENATOR MACGIBBON -What is the purpose of the vehicle that we are buying? Are we buying one or are we buying a range of vehicles?

MAJOR-GEN. JEFFERY -We are buying a range of vehicles, we hope, under the one sort of framework. If it is, for example, to be the light armoured vehicle we will buy it in the form of a reconnaissance derivative, a personnel carrier, a surveillance vehicle and a command post vehicle and probably an ambulance.

SENATOR MACGIBBON -General, is it true in the personnel carrier role that you would have a crew of two and with eight troopers on board with three days supplies, that the axle load would be beyond the design limits?

MAJOR-GEN. JEFFERY -Mr Chairman, we will have a crew of two with seven assault troopers. We are looking at ways and means of reducing weight levels for that particular vehicle and we think that we will achieve that quite satisfactorily.

SENATOR MACGIBBON -How would you do that, General? How would you reduce the weight of the vehicle?

MAJOR-GEN. JEFFERY -We will do it by making other arrangements for the amount of stores or fuel or munitions or fitments that we would put into that vehicle . We are also looking at technical designs for the tail ramp in which we might be able to produce it with a lighter weight material but we do not see it as being a critical problem at this stage.

SENATOR MACGIBBON -What is the habitability of the vehicle when it is closed down?

MAJOR-GEN. JEFFERY -The only problem with habitability at this stage is the heating and cooling. In the trials in the north, temperatures inside the vehicle got to round about 55 degrees centigrade. We are confident, however, that we will be able to have developed suitable cooling arrangements whether it is an air-conditioner or whether it is some sort of cooling system that will reduce the inside temperature to ambient temperatures. I am confident of saying that because the Saudi Arabians, who are already in the process of taking on very large orders of that vehicle, have an air-conditioner system already developed for that purpose.

SENATOR MACGIBBON -Fifty-five degrees centigrade is getting close, I would image, to limits of tolerance if you close down because you would have a high humidity factor in many parts of the north with that as well. There is no air- conditioning in this vehicle, is there?

MAJOR-GEN. JEFFERY -Mr Chairman, this will be one of the criteria that we will require of the Australian version of that vehicle.

SENATOR MACGIBBON -If we put air-conditioning in we will probably have another 200 kilogram weight penalty, are we not?

MAJOR-GEN. JEFFERY -Those factors have already been examined by the project team in coming up with the final solution that we feel will meet the requirement.

SENATOR MACGIBBON -The vehicle is obviously very good on prepared surfaces. What has been the result of the testing off-road?

MAJOR-GEN. JEFFERY -The vehicle is obviously primarily designed for rapid road movement and in the operational context, one would envisaged its being used primarily for surveillance of road nodal points, airfields, and beach sites- all of those, of course, having road access. Across country, its performance in the dry is good, although there was a problem of staking of the tyres that were on our evaluation vehicles. We are confident that we will be able to develop a better tyre. Michelin is already coming up with some promising results in that respect. In the wet, you can bog the vehicle. There is no question about that. But what we would be looking at, of course, and part of the function of the military geographic information unit that will be established in the North, will be to tell us in the wet where we cannot actually drive. We would then use other reconnaissance assets to cover that sort of territory if the need arose, for example, by air, foot patrols, or tracked vehicles.

SENATOR MACGIBBON -Could you tell the Committee the type of tyres that were staked and the number of kilometres that were driven on the trials?

MAJOR-GEN. JEFFERY -I will take that on notice.

SENATOR MACGIBBON -Was there any damage to the vehicle apart from tyre damage? Were there any transmission or steering problems on the off-road trials?

MAJOR-GEN. JEFFERY -I am not aware of any problem that has caused the project team any difficulty in terms of meeting the capability requirement.

SENATOR MACGIBBON -What about the general mechanics of it? Has the engine on transmission performed well on trials?

MAJOR-GEN. JEFFERY -It has performed satisfactorily and we have no reason to suspect that it will be difficult. There were heating exhaust problems which had to do with the layout of the exhaust system which we will overcome when we put the Australian mods into the vehicle itself.

SENATOR MACGIBBON -Is it true that the Army borrowed four Bisons from the Canadian Army?

MAJOR-GEN. JEFFERY -It is true because if the acquisition of the type of vehicle we recommend does come to pass, we would see the Bison becoming the personnel carrier derivative of the LAV 25.

SENATOR MACGIBBON -Is it also true that three of the four engines blew within the first four months of trials?

MAJOR-GEN. JEFFERY -I cannot answer that, but what I can say is that we have no difficulty in respect of the overall performance of the engine.

SENATOR MACGIBBON -The Bison has got a slightly different engine. It has a later development of the engine to it. I will just move to the safety of the vehicle with respect to armour plating. Could you describe the armour protection that this vehicle offers its occupants?

MAJOR-GEN. JEFFERY -The armour will stop artillery shrapnel and small arms. It will not stop slap armour piercing or heavy mines and that sort of thing. We are well aware of this and we are investigating overseas solutions to the armour piercing slap round problem. And as well as that, our own research people are looking at solutions in the form of ceramic and applique armours, and again we are reasonably confident that we will find a solution to that problem.

SENATOR MACGIBBON -Would it not be true that if you armoured it you would markedly increase the all-up weight once you started bolting on applique armour?

MAJOR-GEN. JEFFERY -Obviously we would increase the all-up weight. What we would do would be to armour critical components such as the crew compartment or the engine system. I would not anticipate at this stage that we would be trying to armour the whole vehicle.

SENATOR MACGIBBON -You mentioned something about mines; what is the degree of protection? Is it proof against AP mines and some anti-armour, or only AP?

MAJOR-GEN. JEFFERY -It would be proof against AP. With anti-armour it depends on the size of the anti-armour. I could not give you a definite conclusion there because we have not tried it. It was not tested to that extent in the desert, but the vehicle-it is an eight-wheel vehicle-is capable of running on six, so if you did blow a wheel, or two wheels laterally, you could still run the vehicle.

SENATOR MACGIBBON -Is it true that the trials group put a 7.6 round through the upper deck of one with its own weapon?

MAJOR-GEN. JEFFERY -Mr Chairman, I am aware that there was an accidental discharge; where that bullet went I do not know.

SENATOR MACGIBBON -Legend has it, Major-General, that it went through the upper deck. That is really a little disturbing, because it means that small arms fire can penetrate that hull.

MAJOR-GEN. JEFFERY -Mr Chairman, the LAV25 operated very effectively in Desert Storm. There was no problem that I am aware of in an operational situation in that context, that is, where it was suspect against normal small arms fire.

SENATOR ROBERT RAY -Did you see any, Senator, that were penetrated by small arms fire?

SENATOR MACGIBBON -No, I did not see that, but they were not involved in major anti-armour. In my experience they were used more on a transport and reconnaissance role outside intense fire. But, was it not a practice with the M113s to dust off a 113 with a small calibre machine-gun-a 30-calibre machine- gun, or something-if the enemy were crawling over them, or something. That could be safely done?

MAJOR-GEN. JEFFERY -Yes, that is correct.

SENATOR MACGIBBON -It would be a rather hazardous procedure here, would it not ?

MAJOR-GEN. JEFFERY -No, I do not think that is so. I have confidence that the vehicle has adequate protection against normal small arms fire. My only concern would be against particular types of armour-piercing ram.

SENATOR MACGIBBON -What is the basic defensive armament on the vehicle? Will they all carry a turret, or not?

MAJOR-GEN. JEFFERY -The LAV25 will have a 25-millimetre cannon chain gun. The remaining vehicles will have a 7.62 machine-gun.

SENATOR MACGIBBON -Yes, but how will that be mounted? Will it be in a turret or exposed?

MAJOR-GEN. JEFFERY -It will be in a turret.

SENATOR MACGIBBON -What will be the weight of the turret?

MAJOR-GEN. JEFFERY -Mr Chairman, I cannot answer that. I can find that out for you.

SENATOR MACGIBBON -I suggest to you, Major-General, that that will add considerably to the weight again, and I do have a concern about the weight of these vehicles with respect to their design. You have air-conditioning and you put a turret in it. Air-conditioning would be about 200 kilograms and the turret would be up to 600 kilograms, even with a 7.62 in it, leading to a position where there is not much room for stores and bodies in it.

MAJOR-GEN. JEFFERY -Mr Chairman, I can give a good assurance that those factors have already been looked into in some detail by the project team, and whilst we may have to pay certain small penalties, perhaps in the amount of fuel we carry in certain situations, or perhaps in the amount of logistics we carry in a particular vehicle, it will not penalise us in terms of the overall performance, or in terms of the number of crew or assault troopers that we carry.

SENATOR MACGIBBON -Where are we with the contract? Did we sign the contract, or are we thinking of signing the contract, or are we going to go to tender, or what?

MAJOR-GEN. JEFFERY -The Defence Force definition committee has agreed an equipment solution and is in the final stages of putting the final draft equipment acquisition strategy together. I would hope that both our suggested equipment solution and equipment acquisition strategy will go to the Minister and the Government perhaps within the next fortnight. We would then look for a request for tender to go out in about October this year and we will be looking to signing a contract, preferably towards the end of January, early February 1992. This would be to meet a delivery schedule which we would hope would commence in June 1993 and go through to the end of 1994.

SENATOR DURACK -Excuse me interrupting there. I thought we were told the other day that we had decided to buy 97 of them for $256m or something like that?

MAJOR-GEN. JEFFERY -That is a project cost, Senator. We still have to get the final governmental approval for the equipment solution--

SENATOR DURACK -I will have a look at the transcript but I think that was firmly stated.

SENATOR ROBERT RAY -There is really no competition in the tendering. Before we take that a bit further, I will call on Mr Jones to explain what was said on Monday.

MR JONES -What we said on Monday was that the Government had given project approval for the next phase of the wheeled armoured fighting vehicle procurement, the dollar amount was quoted to you and the number of vehicles. The process we are now going through, as the General is describing, is a source selection and tendering process, which will determine the actual vehicles' configuration and the delivery arrangements.

SENATOR DURACK -Does that mean we might save some money?

MR JONES -What we in Defence consider we have is an upper limit from the Government for that particular project and, indeed, if it turned out we could not acquire those vehicles for that cost, we are required to go back to Government.

SENATOR MACGIBBON -That figure of 97 for $256m is about $2.5m per vehicle. Do you think that is good buying at that price?

MR JONES -I could not comment. I am not an expert on that. But I point out that that is a project cost, almost certainly includes some degree of contingency and, certainly, spares, support, training and a whole range of other things. So it would not be valid to divide the number by the amount to try to get a unit cost.

SENATOR MACGIBBON -I know that. But it is the convention when you are talking about defence equipment that you have to arrive at some unit cost and, on the same basis, you are looking at about $8m for a main battle tank. The capability of buying a main battle tank is, I would have thought, far more than three times the capability of this LAV.

MAJOR-GEN. JEFFERY -The actual project cost for the prime equipment, that is, for the 97 vehicles, which includes the hull, the turret--

SENATOR ROBERT RAY -No, we do not give those details, sorry. We will not give those details before we negotiate a price.

SENATOR MACGIBBON -The final thing is: has any consideration been given to Australian manufacture? The reason I ask that is that I can remember when the M113 program started, where we started with a small buy and we kept dribbling in year after year after year until we had over 800 vehicles. It would have been very economic to have built those vehicles in Australia. We are going to have well over 100 vehicles for a start. Why cannot they be licensed built within Australia?

MAJOR-GEN. JEFFERY -Very serious consideration has been given to making the vehicles in Australia, but there are big cost penalties to do that, of the order of $45m of which about $10m would be in licence from the parent company, about $20m-$25m in terms of setting up and tooling and about another $15m to produce what we would estimate to be required in half a dozen prototype vehicles which would virtually have to be hand built. And it simply does not make sense because there is no strategic imperative or indeed operational requirement to do that, to pay that cost penalty.

SENATOR MACGIBBON -A final question for the Minister, the same one I asked Foreign Affairs the other night. This is not part of the deal to induce the Canadians to buy a development of the Australian submarine, is it?

SENATOR ROBERT RAY -It is not, although if I could convey that impression to the Canadians, I would not hesitate. So it is certainly not.

SENATOR DURACK -Well, you have convinced me that it is by now.

SENATOR NEWMAN -You were talking earlier, General, about the heat in the LAVs in northern Australia and also the difficult terrain, and Senator MacGibbon was asking you some questions about that. In the light of the experience that our men had in very similar terrain in Namibia, on the Angolan border, with similar climatic conditions, and now that we are moving down the track towards removing sanctions against South Africa, has any consideration been given to looking in that direction for procurement of suitable vehicles?

MAJOR-GEN. JEFFERY -No.

SENATOR NEWMAN -Is that because we had the sanctions? We are now talking about future purchasing. Is it not sensible to look at another country which actually has very similar conditions and proven vehicles? I refer to mine protection, particularly.

MR POWELL -The consideration of South African vehicles was not on the agenda. It is potentially an option but the vehicle's performance, from what we understand, whilst it has characteristics for more internal security-type activities, there were certainly weaknesses seen in the technical evaluation which was undertaken by the Army engineering design establishment, to the point where it was seen as something which it was not sensible to pursue further.

SENATOR NEWMAN -But at that time it was presumably because of the politics.

SENATOR ROBERT RAY -That might have had to do with being good at running over kids in the street!

CHAIRMAN -Order! Senator Newman. Mr Powell-I cannot comment on that.

SENATOR NEWMAN -I am really wanting to follow up the same thing, I think. At what time was that evaluation done? Presumably it was dismissed because of the political implications at the time, which are now changing. Is it not worth while having a look at a proven vehicle in country that is much closer to ours than perhaps Canada?

MAJOR-GEN. JEFFERY -I think we would then have considerable problems in meeting the strategic imperative of the timeframe. We want to get 2 Cav. equipped commencing mid1993, because it is up there in the north in early 1993 . To continue using M113s, for example, will be very, very expensive to do- something like three times the operating cost, with a far less efficient vehicle than the proposed acquisition that we are plugging for. That would be one reason. I think we would be right out of time in terms of properly assessing the capabilities of a South African vehicle which, as the Acting Deputy Secretary says, would in most probability be related more to internal security-type activities than to what we want it for. That is to surveill and to be able to deal with small, lightly armed enemy groups.

SENATOR NEWMAN -I would have thought that was what it was being used for on the border. Maybe we would get a good buy, with a near-new used fleet of vehicles that they are not going to need any more.

SENATOR ROBERT RAY -I think the previous answer basically stands.

SENATOR DURACK -I am somewhat surprised at the extent to which you have dismissed any Australian assembly, at least, of this vehicle.

MAJOR-GEN. JEFFERY -We are proposing a considerable Australian content, up to 45 per cent of the prime value. To give an example, if a particular solution--

SENATOR DURACK -What will the Australian content be?

MAJOR-GEN. JEFFERY -The Australian content would be in the painting of the vehicles, the fitting out of all the ancillaries, the provision of the communications, the provision of certain types of surveillance equipments and then all the follow-on purchases of fuel, ammunition, repair and maintenance upgrades, which will be very substantial and which will all be done in Australia.

SENATOR DURACK -Ultimately there is going to be a great deal of modification to it, from what you have said. Will that be done in Australia?

MAJOR-GEN. JEFFERY -These will be internal modifications and that will be done in Australia.

SENATOR DURACK -How about the air conditioning, for instance?

MAJOR-GEN. JEFFERY -No, the air conditioning I think will be done as part of the prime contract.

SENATOR DURACK -But it will come into Australia a completely built-up vehicle?

MAJOR-GEN. JEFFERY -It will come into Australia as a hull, a turret, engine transmission and perhaps some of the night observation equipment. All the rest of the fitments--

SENATOR DURACK -Wheels?

MAJOR-GEN. JEFFERY -Wheels, but not tyres.

SENATOR DURACK -Near enough to completely built up.

SENATOR ROBERT RAY -Let me just say this, Senator. We might have a chat if you can get an Australian manufacturer to deliver at the price, $45m-we will be in it. As much as possible--

SENATOR DURACK -How hard have you looked for that?

MAJOR-GEN. JEFFERY -That is to build the vehicle?

SENATOR DURACK -To assemble it in Australia. Have you had any tenders sought on this?

MAJOR-GEN. JEFFERY -It is not intended, for example, that the hull be fabricated in Australia because of the welding complexities, which we simply could not do without a great deal of difficulty and time. We cannot build the turret here without going to exorbitant expense. We are happy to buy overseas an existing turret with an existing--

SENATOR DURACK -Surely you are not suggesting that we cannot build them?

SENATOR ROBERT RAY -I think what we are suggesting, Mr Chairman, is that it has to do with the start-up costs and the amount of the run.

SENATOR DURACK -You are talking about price.

SENATOR ROBERT RAY -This is the difficulty. The company that makes the biggest lot of these has got an enormous run scheduled. I do not know what it would constitute, the biggest one that does it, but it would only be a couple of percent, I would imagine.

SENATOR MACGIBBON -It can hardly be a very difficult welding job. We undertook to build six submarines which are on the limits of welding technology, with very thick plate and all the rest of it, for the Collins class-that is for a run of six. You are looking at a run here of close to 100.

MAJOR-GEN. JEFFERY -The welding of the vehicle that we are looking at is a bit more complex than the submarine. This is measured in binel rating of the hardness of the steel which has a rating of about 500 against the submarine binel rating of about 240. It has been a very complex problem for the manufacturers overseas of the particular vehicle that we are looking at; indeed, they have only just overcome the technical problems after production, I understand, of about 2,000 vehicles.

SENATOR DURACK -Are there any offset arrangements in relation to it?

SENATOR ROBERT RAY -We have not quite got to the contract stage yet.

SENATOR DURACK -Are you going to be seeking them?

SENATOR ROBERT RAY -Yes, we will.

MAJOR-GEN. JEFFERY -We will be seeking offsets, yes.

CHAIRMAN -Do you think you will get them, negotiate them?

MAJOR-GEN. JEFFERY -I am confident that we will, yes.

SENATOR SCHACHT -I would like to ask some questions on the Raven and Discon project which is listed on page 276 for the present year and then it is listed again on 277 and 278 and mentioned again on 279 for evaluation into the future. Was the Raven and DISCON project amended as a result of--

SENATOR ROBERT RAY -They are two entirely different projects.

SENATOR SCHACHT -I know they are two different projects, but they are both about communications. I will taken Raven first, but I will ask the same question about DISCON. Was the Raven project amended in any way as a result of the Government's decision and the civilianisation statement the Minister made earlier in the year? Is the Raven project needed to the same extent, and can some of the things be done by civilian equipment?

MAJOR-GEN. JEFFERY -The original Raven requirement was for of the order of 13, 500 radios. That was later capped by Government at 10,500 and has now been further capped, to the completion of phase 4C of the Raven project, to 7,163. What is being looked at by Government and headquarters ADF is, as a result of the force structure review, an assessment of what additional radios we may require beyond that 7,163 to meet the new liability brought about by the review. This is being undertaken under project Wagtail, and it is a function of ACDEV, Deputy Chief of the General Staff and FDA to come up with that viability.

SENATOR SCHACHT -Just for the record, and also partly for my memory, could you briefly describe the purpose of the radios being purchased under Raven? At what level will they be used within the Army?

MAJOR-GEN. JEFFERY -Raven is a tactical radio, in both the high frequency and the very high frequency modes. It is the radio used by combat units primarily- infantry, armour, cavalry and so on.

SENATOR SCHACHT -For example, within an infantry battalion, would each platoon have one or two Raven radios?

MAJOR-GEN. JEFFERY -Each platoon would have a VHF Raven and probably a high frequency Raven. It may be issued additional Ravens to do particular tasks.

SENATOR SCHACHT -And the purpose at platoon level is for the platoon commander to be in contact with his superior officer at the company level, battalion level and so on?

MAJOR-GEN. JEFFERY -Yes. You would have what would be known as a battalion command net and battalion administrative net. That command net would allow a commanding officer to talk with all his companies and from the companies down to each of the platoons, and then there would be a holding of reserve sets at the battalion level for specific functions.

SENATOR SCHACHT -With the VHF and the HF radios, the very high frequency and the high frequency, the communication goes from one radio to another radio some distance away at the platoon level or headquarters level? It does not go through a transmitter, relay or anything like that? When you use it, you go direct to the receiving radio that the platoon commander may have?

MAJOR-GEN. JEFFERY -The VHF generally does the closer range work and the high frequency Raven does the longer distances. The equipment they would use would depend on whether the platoons were separated by 500 yards or 200 miles. To answer your question on relay, there are times when a relay or a rebroadcast facility might be set up.

SENATOR SCHACHT -It says on page 276 that the production in the UK of 360 HF radios was completed. What was the cost of those per unit? You can take it on notice if the figures are not available.

MAJOR-GEN. JEFFERY -It is very hard to give a cost per unit. We can give a full project cost.

SENATOR SCHACHT -I can divide it by 360. On the same page it says that the production of HF radios at SiemensPlessey Electronic Systems facility at Meadowbank, New South Wales, totalled about 651 of the currently contracted 1, 660 radios. What would the 1,660 amount to?

MAJOR-GEN. JEFFERY -I do have ballpark figures for an HF radio and a VHF radio , but it would be simplistic to multiply the number of radios to get the total project price, if that is what you are getting at.

SENATOR SCHACHT -What I am really after is a rough price per unit of the radio .

MAJOR-GEN. JEFFERY -A rough price-and I mean it is rough-would be about $25, 000 for the high frequency one.

SENATOR SCHACHT -That is HF, is?

MAJOR-GEN. JEFFERY -That is HF, and about $15,000 for the VHF.

SENATOR SCHACHT -I notice that the full production of VHF radios in the UK has yet to commence. There was no opportunity to manufacture those radios in Australia, I presume?

MAJOR-GEN. JEFFERY -They will be built in Australia. What is happening in the UK is that they will build the initial 300-odd and that provides the software package and the technical expertise ensuring that the thing is working all right. Then the remaining 3,400 will be built by SiemensPlessey Australia in Sydney.

SENATOR ROBERT RAY -If you read the explanatory notes carefully you will note that the high frequency radios are the ones that have been done so far and the very high frequency radios are the ones yet to be done.

SENATOR SCHACHT -It says that full production of the VHF in the UK has yet to commence.

SENATOR ROBERT RAY -Yes, whereas earlier it is talking about high frequency.

SENATOR SCHACHT -While we are on Raven, I notice at page 278 that deliveries of about 1,164 HF radios are expected and introduction into service will commence early in the financial year. That is the outlook for 1991-92. That is all a part of the same contract, is it?

MAJOR-GEN. JEFFERY -Yes, that is part of the contract for what will be 3,246 HF.

SENATOR SCHACHT -When those 1,164 are delivered, how many of the 7,163 will have been delivered?

MAJOR-GEN. JEFFERY -There will be 3,246 high frequency radios.

SENATOR SCHACHT -Full production of the VHF has yet to commence. How many of those will be in that production when it commences?

MAJOR-GEN. JEFFERY -We will be buying 3,917 VHF radios, production commencing at the end of 1992 or early 1993, we anticipate.

SENATOR SCHACHT -Which brings it to 7,100. I want to ask about the assessment that the defence forces may make, looking to future technologies and so on. General, I do not think you will be surprised at this question because I asked it in an inquiry that the Joint Foreign Affairs, Defence and Trade Committee was conducting about the future of the Reserve, an associated matter. In the civilian area we have seen the rapid technological development of cellular mobile phones which can be purchased at the moment for up to a couple of thousand dollars. With that and with the development of satellite technology on continental Australia, could we get very much the same system, with some adaptation, at a per unit cost that would be a lot less than $25,000 or $15, 000 per unit? I just wondered whether in the review those sorts of things were going to be looked at.

SENATOR ROBERT RAY -I will not say who put me on to this-a certain Jeff Kennett and Andrew Peacock! I would rather use a Raven radio. We are not going to put an automatic redial on to the Press Gallery either!.

SENATOR SCHACHT -Mr Chairman, I knew that a sharp Minister like Senator Ray would use that anecdote.

SENATOR ROBERT RAY -Rather than just be flippant, I should refer to the communications corporate plan, which was published in May 1991. I have a copy here for you to have a look at, but I do not expect Senator Schacht to have read that because we put down so many documents at the time. We do make the point that as much as possible, firstly, we should use a civilian infrastructure and, secondly, be careful of committing ourselves to communication equipment that could be quickly out of date, which means that we should be working more closely with Telecom and its competitor when it comes in. It may well be that when Motorola gets going--

SENATOR SCHACHT -The iridium project?

SENATOR ROBERT RAY -You would be able to do that. Frankly, a mobile phone on the fifth peak of the Kimberleys is not much use to us at the moment.

SENATOR SCHACHT -That is why I thought I would talk about satellite technology .

SENATOR ROBERT RAY -That is right. What this communications plan talks about and is focused on, and it was rewritten several times, is to get as close to the civilian infrastructure as possible and also that much closer to the changes in technology. That is one of the difficulties you face in Defence. We are so methodical that, in the end, we can find ourselves trapped with outmoded technology. That is something that I specifically, and Gordon Bilney too, asked the various sections of the Department to monitor closely and work as closely as possible with the known experts, one of which is Telecom. We are , I might add in conclusion, Telecom's biggest customer in Australia.

SENATOR SCHACHT -Which always puts you in a very commanding position in terms of dealing with the defence forces and dealing with Telecom. They are not going to upset their largest customer, and I do not blame them. Is there a standing committee with Telecom technical experts that meets on a regular basis once every couple of months to assess those matters?

VICE-ADM. BEAUMONT -Yes, there is, on which headquarters and other parts of the Department are represented.

SENATOR SCHACHT -And it meets regularly?

VICE-ADM. BEAUMONT -Yes, it meets on a regular basis.

SENATOR SCHACHT -On the question of Raven, I can understand the Minister's anecdote about Jeff Kennett and Andrew Peacock finding a way where the system falls down. I particularly want to ask about DISCON, which is mentioned on page 277. As I understand it, DISCON has been around a long time for development and introduction. It is again mentioned here that the delay is over 30 months. Can you tell us when the DISCON program started?

SENATOR ROBERT RAY -I will ask Mr Powell to answer that.

MR POWELL -The answer is yes, there have been some delays. DISCON will essentially be practically completed by July of next year. DISCON has had some difficulty with one particular point, the message switch. It was definitely not with the hardware but with the software. At a review last month that software problem had been overcome and the software is now being used to train the trainers; the message switch, indeed, is a key part of the DISCON system.

SENATOR SCHACHT -When did the DISCON program start?

MR POWELL -The contract was signed in 1984. The installation is now covering phase 1 and 2.

SENATOR SCHACHT -Before you signed the contract in 1984, I presume there was a definition going on, and a study going on in the Defence Forces before that?

MR POWELL -There were competitive tenderers.

SENATOR SCHACHT -When did the whole idea of DISCON start being worked on as a program or project within Defence?

VICE-ADM. BEAUMONT -About 1978, I think.

SENATOR SCHACHT -So it has been going 14 years, that is, from the very beginning of the concept of DISCON. All I am trying to say is that it takes up the point the Minister makes about technology rolling over the top of you. You get to one stage and things start changing.

MR POWELL -I should point out that DISCON makes heavy use of Telecom lines and , as Telecom's technology is enhanced and improved, DISCON has, naturally enough, improved with it. The messages which have been the difficulty are the switches in the Defence installation that connect the secure messages into the Telecom system and, indeed, the distribution of the system.

SENATOR SCHACHT -Was the message-switching equipment design internal to the Defence Force, which your people designed, or did you go out and hire somebody , for example Telecom, to design the software?

MR POWELL -The contract for DISCON required the prime contractor, which is Seimens-Plessey, to develop a message switch that had certain characteristics. It was not a Defence design or an Army design which was used and given to somebody to design. The software, naturally enough, had to be able to interface with the normal Defence signals method of operation.

SENATOR SCHACHT -So your message-switching equipment is actually in the Defence establishment, or is it in the exchanges?

MR POWELL -It is in Defence establishments.

SENATOR SCHACHT -Then it goes into the Telecom lines?

MR POWELL -Correct.

SENATOR SCHACHT -I notice that page 277 refers to the secure voice and facsimile service which was extended to New South Wales, Victoria, Queensland, South Australia and Western Australia. When does it get to the Northern Territory?

MR POWELL -Phase 2, which will be completed by July of next year.

SENATOR SCHACHT -When that system is extended to include the Northern Territory, how many secure lines or systems would you get going from, say, my State of South Australia, or Adelaide, to Darwin? How many secure lines would you have through the system?

MR POWELL -It is not case of having a line from Adelaide to Darwin. The communications can go via the Telecom lines in a variety of ways to Darwin.

SENATOR SCHACHT -Someone said that there are 2,000 different ways to get a message from, say, Sydney to Darwin, so you will be able to use any of those?

MR POWELL -That is one of the reasons why we are using the Telecom system. It gives us these alternatives as much as it can within its own system.

SENATOR SCHACHT -What will be the overall cost of the DISCON project when it is completed by 1992-from the first contract in 1984, I suppose?

MR JONES -On page 424 of the explanatory notes, you will find the current project approval for DISCON to spend to 30 June 1991, and the amount provided for in the Budget. Those figures are, respectively, $226m--

SENATOR SCHACHT -It is $226m all up?

MR JONES -That is the current level of project approvals.

SENATOR SCHACHT -Is that $226m overwhelmingly spent on the message-switching equipment?

MR POWELL -No.

SENATOR SCHACHT -Can you explain to me where the major expenditure of that $ 226m has gone in DISCON? If it is not on message-switching equipment, where has the major expenditure been?

MR POWELL -The DISCON system consists of handsets, secure communications and cryptographic devices, which enabled you to pick the telephone up and have the message into the Telecom lines in an encrypted form, with the reverse happening at the other end.

SENATOR ROBERT RAY -Come down to my office. I have about five different types there.

SENATOR SCHACHT -Yes, I have noticed them on your desk.

SENATOR ROBERT RAY -I have always said that if they all ring at the one time we will go to the basement.

SENATOR SCHACHT -So overwhelmingly it is the cryptic equipment, the handsets?

MR POWELL -Because it covers defence establishments Australia-wide a large number of these units, both handsets and cryptographic equipments, are required. They all add up to the cost we have.

SENATOR SCHACHT -When you are having an exercise such as Kangaroo 89 and you are doing the exercise in the far north, these things are overwhelmingly in a defence establishment?

MR POWELL -These are static.

SENATOR SCHACHT -So if as part of the exercise you wanted to send a secure message to the battalion commander who is out at a base in the west Kimberleys , would it go through Raven?

VICE-ADM. BEAUMONT -Project Parakeet.

SENATOR SCHACHT -Which is secure?

SENATOR ROBERT RAY -There is another way of doing it, apart from Parakeet.

SENATOR SCHACHT -Parakeet has been completed, has it?

MR POWELL -No, Parakeet is in the early stages.

SENATOR SCHACHT -Is that why it is not listed here?

MR POWELL -Yes.

SENATOR SCHACHT -Is Parakeet the mobile system that will guarantee the same security as DISCON?

MR POWELL -Parakeet is linking from the units into DISCON. In other words, it is the link from where the Raven equipment can take you, rearwards into the DISCON terminals, wherever they may be, then to translate back to the other areas.

SENATOR ROBERT RAY -I have to say that about 80 per cent of the answers are in this. I might get you a copy. It has even got pictures.

SENATOR SCHACHT -I must say that, as Major-General Jeffreys would know, I have raised these questions before. It is just generally that you put me onto such things as the Telecom debate and the ALP, so we all became fanatical afficionados for the telecommunications debate. An amateur in charge of this becomes rather dangerous; he thinks he knows a lot. I fall into that category. I am intrigued about what you have covered already-the question of not trapping ourselves into long term expenditure. If, for example, the iridium program with Motorola takes off and it provides a much cheaper way and also can be a secure way of message relaying on continental Australia, we will have spent several hundred million on something that would be out of date. I will read the document and wait for the next Estimates Committee.

SENATOR DURACK -I have a question about the Anzac ships, at page 275. Have you seen recent reports that the New Zealand Defence Ministry is concerned that the cost of New Zealand's two frigates has risen by 45 per cent since the decision to buy them?

SENATOR ROBERT RAY -No, I have not seen those reports.

SENATOR DURACK -Would there be any substance in these reports that there would be a cost escalation of that kind?

MR WOOD -I was in New Zealand recently when that came out in the newspaper. The New Zealand Ministry of Defence and the Minister for Defence issued a complete denial of that report.

SENATOR DURACK -What do they estimate the cost increase to be?

CDRE DECHAINEUX -There has been no increase in the approved cost of the project and there is no substance in that report.

SENATOR DURACK -And New Zealand is not worried about it?

CDRE DECHAINEUX -I did not say that. To my knowledge, it is not. As Mr Wood has said, there was a denial from New Zealand Defence officials.

SENATOR ROBERT RAY -It is not the first time, though, that there have been articles in the last few months. I have not followed this one, but there was an enormous amount of criticism in the New Zealand newspapers about the amount of New Zealand content. They are really jumping the gun. It is nowhere near a stage where any of the commitments could be met, but there is every indication that New Zealand is going to get an absolutely fair share of the work. So it is not unusual. The New Zealand press are very unlike ours-they are prone to exaggeration.

SENATOR DURACK -How much subcontract work has gone to New Zealand companies so far, on this project?

CDRE DECHAINEUX -The total program requires an equivalent of 80 per cent of contract price, made up of 73 per cent Australian and New Zealand content and 7 per cent Defence offsets. To date, Amecon has achieved Australian and New Zealand content to the value of $226m and $9m respectively.

SENATOR DURACK -That is Australia and New Zealand; is there any break-up between the two?

CDRE DECHAINEUX -There is $226m Australian content and $9m New Zealand content .