Senator BISHOP(7.01 p.m.) —I move:

That the Senate take note of the document.

I rise to make a few remarks about the annual report 1996 of Australian Defence Industries. The end of the 1995-96 financial year marks the completion of Australian Defence Industries' six-year restructuring program. This program was created to place the company, fully owned and operated by the Commonwealth government, on a commercial footing.

When the program started, ADI were losing around $300 million per annum. This year, they have reported an operating profit before abnormals and tax of $4.7 million. Whilst this is better than prior to 1989, it is still far less than in previous years. There was also a $34.5 million write-off in abnormals this year. However, this is in line with ADI's budget and the 1995-96 financial year was always intended to be one of significantly lower profits, due to the end of the corporatisation process. This is due in large part to the substantial restructuring of the munitions business, which culminated in the opening of the world-class new munitions plant at Benalla, Victoria, in August of this year.

One query did strike me as I flicked through the report. I refer particularly to page 37 where, consistent with the corporations code, the remuneration paid to directors has been outlined. It is noted, for interest, that the remuneration to, presumably, the chief executive officer of the corporation is in the range of $460,000 to $469,000. I trust that the Minister for Defence (Mr McLachlan) is aware of this; that there are good reasons for such high payments; and that he is aware that, particularly in a year when all indicators of the company have shown it to be performing poorly, the salary and other allowances paid to the CEO are so high. I just note that in passing.

ADI is working on a number of important projects, the biggest of which is its building of six minehunter ships for the Royal Australian Navy. This project is worth around $1 billion in revenue.

One of Australia's best assets is our human resources talent in research and development. ADI's employees are no exception, and this is reflected in their construction of the Huon class minehunter, the most advanced ship of its type under construction anywhere. It boasts a variable depth sonar system, remotely controlled mine disposal vehicles and an advanced tactical data system. The ship also has multifunctional control consoles which can deliver all navigational and mine warfare data concurrently to the command team operators. This is advanced technology indeed and a reflection of the worth of those who have been contributing to this very worthwhile development.

ADI are also building a substantial export market. Recent defence export successes include: sales of ADI's live-fire training system to the USA, Thailand and the United Arab Emirates;  a contract for installation of C3I—or command, control, communications and intelligence—software at the five-power air defence headquarters in Malaysia; the sale of ADI's eye safe laser rangefinder to Canada, with units trialled in Malaysia and France; and the use of the AMASS minesweeping and support system by overseas navies, with a recent sale to the US navy for testing. Indeed, if that program should be successful in the US and implemented throughout the US navy, significant additional revenues can be anticipated.

As I speak, ADI is completing the building and manufacturing of two of its most important contracts in terms of the contribution to Australia's continued security. These are the world famous Steyr rifle and the Collins class submarine, one of the world's most advanced submarines.

ADI has also successfully moved into using its defence knowledge and capabilities for civilian applications, sold both here and overseas. These include: major sales of cellular telephone and trunked radio systems in China, India, Russia and Papua New Guinea; environmental clean-up operations in Germany, Australia and the Czech Republic; the successful completion of Papua New Guinea's primary cellular telephone network; the recovery and recycling of coal tar sludge at the Australian Gas Light Company's Mortlake site in Sydney; the emergency docking of MV Aurora Australis and work on MV Iron Monarch; the repair of soil contamination; and a contract to supply eight 140-tonne cylindrical reactor vessels for the BHP Port Hedland hot briquetted iron project in my home state of Western Australia.

One of the unfortunate sides to ADI's restructuring has been their staff reductions, with over 500 more employees leaving. Indeed, their staff complement has reduced from something over 9,000 in 1985-86 to a little over 3,000 in this financial year. (Time expired)