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Wednesday, 12 October 1983
Page: 1659


Mr SCHOLES (Minister for Defence) —by leave-In conjunction with my colleague the Minister for Defence Support (Mr Howe) I wish to inform the House of recent government decisions concerning the construction of new destroyers in Australia. Honourable members may recall that late last year Williamstown Naval Dockyard in Victoria was invited to submit a proposal for the construction of two FFG-7 class guided missile frigates. The Government has decided, in principle, to proceed with the construction of two FFGs at Williamstown-now to be appropriately renamed the Australian frigate project-although proceeding to construction is subject to a number of conditions.

Honourable members will recall that, in recent years, there have been some very serious problems in the local construction of vessels for the Royal Australian Navy, particularly in the case of one-off builds such as the inappropriately named HMAS Success. Recent changes in management and work practices at Williamstown have, however, led to a marked improvement in that dockyard's performance on naval repair and refit work. The Government's decision to build the two FFGs at Williamstown will be a chance for the dockyard to prove that it can now maintain price and production schedules. Success in achieving these schedules can be enhanced by the co-operation of all parties-management, unions, workforce and the Government.

Before construction is authorised, various arrangements will need to be agreed, documented and put in place. These include: The joint management arrangements between my Department, as the customer, and the Department of Defence Support, as the supplier; the shipbuilding agreement, the document describing the construction task; and a formal signed agreement by each of the Unions at Williamstown, the Australian Council of Trade Unions and management, covering a range of industrial relations and work practice issues. Decisions by the Government to allocate any further work to the dockyard will be contingent upon compliance with this formal agreement. My colleagues the Minister for Defence Support and the Minister for employment and Industrial Relations (Mr Willis) and I must be satisfied that the prerequisite conditions for construction have been met before an order is placed.

The total project cost for the construction of the two FFGs at Williamstown is estimated to be $830m at December 1982 prices, including an allowance for the variation in the rates of currency exchange following the devaluation of the Australian dollar in March 1983. The total project cost includes about $96m previously approved, principally for long lead items ordered in 1981 for the first ship. The ships are expected to be delivered in the early 1990s. The local construction program will mean the continued employment of a work force of more than 2,000 at Williamstown for the next 10 years. It will also give the dockyard valuable experience in a sustained production program and the Government time to plan the replacement of those naval vessels which will reach the end of their useful lives in the 1990s.

There will also be advantages to Australian industry generally, through the procurement of equipment, materials and services, consequent upon the Government 's decision. About half of the total project cost will be spent in Australia as opposed to a much lower figure if the ships were to be ordered from the United States. When added to other major local construction programs including the basic trainer aircraft for the Royal Australian Air Force and the Fremantle class patrol boats for the RAN. This brings the total estimated value of local involvement in defence projects to more than $1.5 billion.

This project will provide an opportunity for the expected efficiency and competitiveness at Williamstown Naval Dockyard to be fulfilled in practice. The future of naval warship construction in Australia will depend on Williamstown Naval Dockyard's effectiveness. I intend to inform honourable members more of the arrangements being made for this project in a statement I plan to make to the House on defence in the near future. I present the following paper:

Construction of two FFG-7 Frigates at Williamstown Naval Dockyard-Ministerial Statement, 12 October 1983.

I move:

That the House take note of the paper.