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Wednesday, 3 September 2014
Page: 6382

Senator FAWCETT (South AustraliaDeputy Government Whip in the Senate) (16:20): I rise as I have done on multiple occasions to talk about shipbuilding in South Australia, and specifically in this case on submarines. I would like to go to the wording of this MPI, which talks about design and build, and yet the clip that we just had played emphasised the build. I just want to talk about design for a moment. The three areas that I want to talk about are the design, the build and the vital shipbuilding capability.

Firstly, in terms of design, one of the things that I had the privilege of doing in 2012 was travelling with a bipartisan committee to Spain, Germany—two of the committee went to France as well—the UK and the US, looking at submarines and the potential for Australia to build a future submarine. One of the things that became very clear was that there were two aspects of design that we need to be very much aware of. Firstly, that Australia does not have the capacity to design a submarine from scratch as a unique Australian design. Whichever nation we choose to partner with, we will need a design partner. That was the clear message that came through to the delegation from each of the nations, including those who do not have any skin in the game—for example, the UK and the US. So, whether we ended up going for a design that originated in Germany, Japan, Spain, France or Sweden, the reality is that the design will be a shared effort. In terms of numbers and capacity, we just do not have the base here in Australia to design from scratch a submarine without taking on completely unacceptable levels of risk. That is the first point about design: we will have a design partner, just as we did with the Collins where it was Kockums. The engagement of potential design partners is not unusual, and with that in mind we have had people from multiple nations coming through South Australia, looking at aspects of our defence industry and our defence needs.

The second thing is that Australia must have an understanding of the design. My whole professional career prior to politics was involved in the support, the certification and the testing of defence materiel. If there is one thing that I can bring to this Senate, it is a deep understanding of the fact that, if we want to be a sovereign nation with capability to own, deployed effectively and maintain defence equipment, we must understand the design. The way we do that will vary. In some cases it will be completely developing and owning a design here; in other cases it will be a transfer of IP from other nations; in some cases it will involve us sending engineers to work deeply embedded with manufacturers and other armies overseas. Whichever mechanism we put in place, it is imperative that we understand the design to make sure we can sustain the equipment through its life and that we can repair the equipment.

We cannot ever afford to be completely dependent upon another nation. I can point to numerous examples—particularly in the aerospace world which was my background—where even our most trusted allies at times when they were under pressure and did not had the capacity to provide spare parts or design effort or even updating of systems to meet the requirements for new threats or operating environments. I can also point to cases where we have saved considerable money and developed more effective and capable systems by having an indigenous design and certification capability for our weapon systems so that either we can be smarter about how we repair them or we can have the option to modify to meet new threats or environments. They have proven to be very capable in joint exercises against the parent service—in some cases the US where the two capabilities have exercised together.

Secondly, in terms of build, one of the things we learnt during this delegation was that there is a range of options for built, many of which come around the risks with quality and therefore the safety and effectiveness of the system and the risks with cost and schedule. One of the consistent messages that came through to the committee was that the preferred avenue for most vendors was to build the first couple of boats—particularly if you are going to build a number of boats in flights—in the country of origin of the design such that the workforce, whether they be manufacturing production workforce or the engineering workforce, have the opportunity to train with and to get the hands-on experience of the build of that boat. Then that company would work at the Australian manufacturing facility—which the coalition and Labor have identified as South Australia—to then look to build the rest of the flights of boat in Australia. That achieves a number of things: it achieves a risk reduction in making sure that we have the right skills and the competence in place to build the boats, yet it achieves an effective transfer of IP and knowledge—not only for the remainder of the build, but, importantly, it also establishes the infrastructure and the engineering know-how to support the fleet of boats through their life. If needs be, rather than a refresh program or service-life extension—it might adopt the model that some countries use of scrap and rebuild to continue the production line. In that way you continue the upgrade cycle for those vessels.

The last part is about their claims of destroying shipbuilding capability ,and it goes to the issue of the valley of death and losing existing investment. I merely lay on the table again the fact that I have laid out in this place a number of times before: at the moment we are just past the peak of workforce for the Air Warfare Destroyer program. We are now in 2014; the Air Warfare Destroyer decision to build at ASC was made in 2005; and the decision to award the design to Navantia was made in 2007. That means that if we wanted a follow-on surface ship to sustain the investment we have in skills and infrastructure at the shipyards in South Australia, Victoria and in New South Wales, that decision would have had to have been made six, seven or possibly eight years ago in order for that work to continue.

The way this government is looking to achieve economies of scale to get the productivity to where we want to be and to sustain our vital and strategic shipbuilding capability is to say: we are now in government and we have been for almost a year; we cannot make a decision to have a completely new design of ship built here at this time, but we can commit to doing the engineering work and to look at how we can use our investment design knowledge around the Air Warfare Destroyer hull to commit to integrating both the CEA radar and the Saab 9LV combat system—both produced here in Australia. On the basis of that engineering risk reduction work we can then look at extending the build program for hulls of the same design as the Air Warfare Destroyer, which will become the future frigate. That means very little risk and, by capitalising on the already-made investment in skills and infrastructure, we can continue to build hull blocks, which get rid of the concerns about the valley of death. When the more complex side of Air Warfare Destroyer program is complete—which is the fit out of the combat systems—we can then roll on to the assembly of the hull blocks and the CEA radar and 9LV systems. So, far from destroying Australia's strategic vital shipbuilding capability, the coalition is in fact putting in place concrete and funded steps to maintain this capability which, for all the reasons I have outlined before, is vital to us having not only the jobs in South and Australia but also the sovereign capability to own and effectively employ defence assets.