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Monday, 18 March 2013
Page: 1852


Senator JOHNSTON (Western Australia) (12:19): In dealing with Appropriation Bill (No. 3) 2012-13 and Appropriation Bill (No. 4) 2012-13 it is important to bring the government's economic record to account and look at what this government has achieved in just the last 12 months. The mismanagement is predominantly exampled by the minerals resource rent tax, a tax that raised no money in its first quarter and appears to be costing the government to administer. The first blush of receipts from this tax indicate that this concept of the Commonwealth has achieved what I do not think any other government in Australia's history has achieved—it has enacted a tax that has actually cost the taxpayer money.

The carbon tax is predicated on a $29 per tonne rate. It is clear when looking at Europe that that is going to be well short of the mark. I think we are running at something less than five euros a tonne at the moment. I have considerable interest in the Defence portfolio. Indeed, significant cuts have been made to that portfolio—more particularly, 10.5 per cent in the last Wayne Swan budget, which has in fact been predicated upon the delivery of a surplus this year. We all know, we are all predicting and we all understood that this promise of a surplus was in fact in line with every other promise that this government has made—a cruel deception on portfolios that have had to stump up the money. Indeed, no portfolio has had to fund the notional attempt at a surplus like the Defence portfolio has.

So we now find out that a 10.5 per cent cut in Defence in support of the pursuit of a budget surplus has been a complete waste of time. It has been a complete deception. No other portfolio has had to find such a cut. Indeed, in the last four years Defence has stumped up $25 billion from its annual budgets to support this government's profligacy. So mismanagement has been the order of the day in terms of economic management and expertise, in terms of economic governance.

In 2009 we had a Defence white paper that set out a clear and apparently funded plan to take Defence funding away from the highs and lows—the vacillations of politics—out to 2030 with a proper, funded bipartisan approach. It was bipartisan because the opposition came to the party and supported that plan. We were told that the plan was one where, in the first two or three years, there would be a contraction of resourcing for Defence but then we would ramp up to meet the requirements of some $275 billion worth of expenditure over the coming 15 or so years. The growth rate was supposed to be three per cent, indexed at 2.5 per cent out to 2017 and then 2.5 per cent thereafter. The fact is that the contraction took place and then the government, through its own ineptitude, complicity and incapacity, decided there would be no ramping up. So what we have seen is a massive run-down in Defence resourcing, and what we are witnessing today is the hollowing out and running down of Defence capability and the elimination of readiness to do things that this government or any future government may, in an emergency, call upon the Defence portfolio to achieve.

What really is of concern when I see appropriation documents come forward is, firstly, that this government has never, ever got one prediction right—not one, be it MYEFO, the annual budgetary figures, the deficit or the surplus. It has never even been close. May I make a prediction: when we look back—it will be after the next election—at what 2012-13 yielded in terms of a surplus or deficit, it will be a substantial deficit. It will be something like $20 billion.

The point about all of this is that there is an effect. There is a serious problem with respect to the responsibility that Canberra has for defence. Having said that $25 billion has come out of this portfolio in the last four years, I can tell you that the Department of Defence, through the minister, has admitted in a question on notice that $200 billion of future Defence funding is unfunded and is not appropriated, and nobody can say where the money is coming from.

So what does that mean for the future? Let us just deal with what is happening economically. The Gorgon gas project is 40 trillion cubic feet of gas, which is enough to keep a million people in electricity for 800 years. Next door to Gorgon is Wheatstone, at 36 trillion cubic feet. Above Gorgon, opposite Broome, out in the Timor Sea is Browse. Browse is three times as big as Gorgon. These are enormous gas deposits. They are going to provide vital energy for China, for South Korea—the Republic of Korea—for Japan and for Taiwan. One of the most important strategic things that we must consider is the fact that the vulnerability of our trading partners is tied up in ships on the surface of the water travelling between Australia and East Asia. Anybody wanting to do damage to our trading partners knows to snip off their supply of energy; it is that simple.

And what are we doing about it? What is this government doing about it? Let us just have a look. We have completely and utterly abrogated our responsibility to provide a serviceable Australian Navy. Currently we do not have a replenishment ship—that is, a ship that can refuel Australian naval vessels on the water. The reason is that HMAS Success is very badly broken. In line with what happened with Manoora and Kanimbla—when the minister suddenly wanted, at the request of the Deputy Commissioner of the Queensland Police Service, to provide an amphibious vessel to Queensland in the face of Cyclone Yasi—the minister suddenly became aware that our amphibious ship capability did not in fact exist. He was in fact told that even Tobruk was on 48-hour standby. Tobruk was not on 48-hour standby; it was in fact subsequently in repairs for almost nine months. So Manoora and Kanimbla have been cashiered because they are rusted out. Success is broken, and we are spending $10 million to have the Spanish bring their replenishment ship to Australia this year. HMAS Choules has blown up her transformer, so that is out of action till the end of May. What does this say about the Royal Australian Navy? It says that our capacity to provide security for energy into East Asia is very sadly depleted, and this is all in the face of a government that has taken $25 billion out of the Defence portfolio.

Just last November at MYEFO, the Mid-year Economic and Fiscal Outlook, the government said, 'Oh, we'll provide some new aircraft—some Growler electronic warfare kits—to the Royal Australian Air Force, and we'll provide some more Bushmasters, a total expenditure of about $1.6 billion.' That all sounds beautiful and we all say, 'Wow, that's nice,' but then the minister says very quietly in the fine print, 'But you've got to find that money from within your budget.' That is just a cut. That is a chop at the knee of the Defence portfolio.

For a trading nation to have massive defence cuts and to have a Navy that is badly broken—I have not even begun to talk about submarines, but I will in a moment—is a high-risk situation. Indeed, this year defence spending as a share of GDP is 1.56 per cent of GDP. We were last at 1.56 per cent of GDP in 1938. But it gets better—or worse as the case may be, depending on your political outlook. Next year we go to 1.49 per cent of GDP. We were last at that level in 1937. It is funny, isn't it—this government has taken us back to defence expenditure levels comparable to 1937 and 1938 as a share of gross domestic product? We all know what happened very quickly thereafter: we needed a lot of ships, we needed a lot of soldiers and we needed a lot of aircraft, all of which we virtually had to rely on the United States for. This government is putting us in exactly the same position.

Let us have a look at the Joint Strike Fighter. We signed up to the fifth-generation Joint Strike Fighter because it is a regionally dominant aircraft. It has phenomenal radar capability. It functions beyond visual range. It can detect a vertical launch at 800 nautical miles. We were supposed to buy 14 planes this year but we have bought two. The whole program, as set out in 2009, is stumbling and bumbling along in limbo. We have the P3C Orion aircraft—a beautiful aircraft that has served our country very well in terms of maritime surveillance. The fact is it is a 1959 design. Almost every other country operating this aircraft has had to spend money rewinging the aircraft because its airframe is so old. We are supposed to be acquiring the P8A to replace it. These are really very important considerations that require clear planning and a clear outlook, but what have we got from this government? The need to rewrite a white paper within about three years of having done a detailed one. The whole space is in utter confusion.

Let us turn, again looking at the maritime, to submarines. In the eighties the then ministers for defence—and we know who they were—decided that we would go with the Swedish socialist experiment with a Kockums submarine that no-one had ever seen or heard of before. We added about 1,500 tonnes to the size of the Swedish A17 submarine. We turned it into the Collins, which was at that time the biggest conventional submarine by submerged tonnes in the world. No-one else has a Collins class submarine. No-one else has the engines of a Collins class submarine. No-one else has the electric motors of a Collins class submarine. No-one has anything like a Collins class submarine. It is running at $1 billion a year to sustain. We probably have, on a good day, two boats in the water and we are hoping to get to three, but it has been a very tortuous, painful ride for the last four years because this government has completely mismanaged these boats, as it does everything else.

Here we are with the whole of East Asia dependent upon Australia for energy, iron ore and coal, and what has happened? Our Navy is badly broken. It requires refunding, re-resourcing and refocusing because this government has decided that, of all the portfolios that can pick up the tab for the profligacy, the spending and the waste, Defence is the one that is so easy to reach into and grab that fistful of dollars from because our men and women in uniform are so disciplined and so loyal they will just cop it sweet—and they have. We will fix that, of course.

But there is the problem: we have a hollowed-out national security focus. The Defence portfolio, which was once running at about 1.98 per cent of GDP under John Howard—towards the end of the Howard government—is down to 1.49 per cent.

Senator Feeney: So what are you going to spend on?

Senator JOHNSTON: I hear heckling from the other side. This is a gross embarrassment to them. They have dropped the ball. They hate Defence. They love to rip it off. They love to grab every bit of money and put all the plans into disarray. The Defence Capability Plan is an absolute scandal in its dysfunctionality. They do not stick to any of the milestones and they do not spend the money, so Australian industry is left wondering when it is ever going to be thrown a bone. This is a government that is chronically good at mucking things up and undermining stability in portfolios, particularly in the Defence portfolio. They are absolutely a gold-medal prospect when it comes to wasting and spending money. That is why we are here: these appropriation bills just give this government another blank cheque to waste more and more money.

What about industry? You would think this government would support Australian indigenous defence industry. They came up with priority industry capabilities—PICs, they are called in acronym form—and strategic industry capabilities—they are called SICs. You would think they would support Australian priority industry capability. They even said that the disruptive pattern combat uniform—that is, the camouflage uniform that our soldiers wear in battle—should be produced in Australia, and yet we caught them, red-handed, going off to China. Having developed low-observable infrared technology in the weave of this clothing, we gave the Chinese the specification. That is what this government does—its incompetence knows no bounds. We have actually shown potential adversaries the weakness and vulnerability of our technology which we took—and I got the evidence from the Defence Science and Technology Organisation—about 15 years to develop. The government gave it to the Chinese because they were looking to save a few bucks.

This is the level of incompetence of these people. They have absolutely no idea about national security. They have absolutely no idea about the cost of readiness and the capacity to respond not just to threats but to national disasters. And look at all the projects that are currently being delivered to the Australian Defence Force. For example, there is the landing helicopter dock ships—Brendan Nelson and Robert Hill did those; the Joint Strike Fighter—Robert Hill did that; and the air warfare destroyer—Robert Hill did that. All of the great projects that are going to see us secure into the next decade have been delivered by Liberal ministers. What has this government done to Defence other than rip the financial rug out from underneath it and leave us ever so vulnerable at a 1937 level of spend? That is what their claim to fame is: 1937. And heaven help us if we have a problem in the next five years.

Debate adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.