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Tuesday, 14 June 2011
Page: 5965

Mr CLARE (BlaxlandMinister for Defence Materiel) (16:51): I think I have answered that question in my responses to previous questions. I made it quite clear that I believe this is a significant challenge but one that can be implemented with the focus of defence government and industry working together. You talked about projects moving to the right. There are a lot of reasons why money has been deferred in this budget, by and large because projects are running late. If you go to page 109 of the ASPI paper, ASPI makes the point that about 80 per cent of the movement of money to the right has to do with projects running late. When projects run late, industry responsible for those projects do not get paid and money rolls over to different financial years.

A good example of that is the air-to-air refuellers project, where there has been a deferral of $316 million for the acquisition of five air-to-air refuellers due to schedule delays, including in relation to deficiencies in the refuelling system, which recently suffered an in-flight failure. The multirole helicopters, the MRH90s, are another example where there has been a deferral of $93 million for the acquisition of 46 MRH90 helicopters. Technical issues there include engine and system reliability that have led to poor flying rates and the project being delayed. New facilities for the Army's 3rd Battalion involve the deferral of $43 million for facility construction and upgrades due to continued wet weather, site identification delays in Townsville and delays in the tender process. At Singleton new accommodation, working and security upgrades at RAAF Base Amberley involve the deferral of $23.3 million due to unexpected environmental and heritage assessment work and a dispute with the contractor. Some of the other materiel projects which are running behind schedule, and as a consequence money has been deferred, include the armed reconnaissance helicopter, where there has been a deferral of $17 million; the high-capacity communications satellite project, where there has been a deferral of $70 million; the Wedgetail project, otherwise known as the airborne early warning and control aircraft project, where there has been a deferral of $61 million; and the air warfare destroyer project, where there has been a deferral of $55 million. There has also been slippage about across 25 minor projects which total about $178 million. This is, I guess, the nub of the challenge. These are big projects listed in the DCP. Where delay occurs, industry does not get paid and money slips to future years. The challenge for us collectively is to improve schedule and reduce delay. As I said in my answer to a previous question, this is what focuses my attention. We do better than the United States and we do better than the United Kingdom when it comes to delay but I do not think that is good enough. The reforms that the government is focused on are all about trying to make sure that we get projects right when they are approved by the national security committee of the cabinet and where problems are identified that they are identified early. The earlier you identify them, the earlier they can be fixed.