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Tuesday, 24 September 2002
Page: 4718

Senator CHRIS EVANS (2:06 PM) —My question is directed to the Minister for Defence, Senator Hill. Can the minister confirm that the government's monopoly shipbuilding sector plan states that demand for naval shipbuilding over the next 15 years will total $6 billion? Can the minister then explain how the proposed single shipbuilder will be viable if its costs, as detailed on page 44 of the sector plan, total $10.1 billion over the next 15 years? Isn't the government deliberately manipulating the figures when it uses one figure to justify rationalisation—$6 billion—and another figure—more than $10 billion—in its modelling of the sustainability of the sector? Isn't it a fact that the total income to the sector over the next 15 years, including construction, upgrades and repairs, will exceed $12 billion, a figure that has sustained two shipbuilders over the last 15 years?

Senator HILL (Minister for Defence) —The industry itself realises that there will be rationalisation. This is because the work from Defence will be significantly less over the next 10 to 15 years than what it has been over that previous period. That is because a number of our major shipbuilding projects are coming to an end—in particular, the Anzac frigate program and the Collins submarine program—and there will be a small break before we move into air warfare destroyers, replacement of the LPAs and also replacement of the support ships.

The industry, recognising that there will be less work than in the past, is of the same mind as government—that is, that it is better to face that reality and see if rationalisation can occur in an orderly way, rather than just simply allow the market to take its toll. That is of advantage to the government, because it means that we are more likely to get the type of long-term investment that we will need within the sector to maintain and service the high-end ships of the Australian Navy, in particular the submarines, frigates and the like. We recognise that to fulfil that task it is going to be necessary that we do invest in the intellectual capital within this area and provide young people, in particular the systems integrators, the Navy architects et cetera, with careers which they can be confident in.

That is why we have been working cooperatively with the industry to see if there is a way in which that rationalisation can occur towards a mutually beneficial outcome—that is, for Defence and for the industry as a whole. The paper to which Senator Evans refers has been produced out of that cooperative attitude. That has been made public and has been considered by me and by other interested players and commentators within the community. The next step will be for me to take propositions to cabinet and the cabinet will then decide what it sees as the next step forward.

In terms of there being insufficient naval work—I am not saying in relation to other civilian work, but insufficient naval work— to sustain the industry in its current form, that is accepted by all the players. Furthermore, it is accepted by all of the players that an orderly rationalisation would be in everyone's best interests. So what I respectfully suggest the opposition do, if it wants to be constructive and helpful to both Defence and the industry, is to come on board and contribute constructively to the debate rather than quarrel about the fine print in terms of the figures in the paper.

Senator Chris Evans —There are a couple of basic assumptions though.

Senator HILL —I am prepared to look at the figures. I would not want to suggest, without looking at them, that they are being quoted out of context. It just seems to be extraordinary that industry, in this instance, supports the government's position and the government's figures. The only party that disagrees is the opposition. That is why I am suggesting to Senator Evans that perhaps here there might be an opportunity for him and his opposition to be constructive and helpful and perhaps even develop some policy for once in their political lives and contribute to— (Time expired)

Senator CHRIS EVANS —Mr President, I ask a supplementary question. I point out to the minister that I am actually asking him questions about the specifics of his paper so we can engage in that analysis. What I point out to him is that there are serious flaws in the analysis and that, in a number of places, the paper contradicts itself. What I ask is: does he admit that there are flaws in that analysis? Is it not, in many instances, plain wrong? Have those flaws been brought to your attention as minister? What have you done to correct the record in terms of the public's understanding of the analysis presented in the plan? Aren't many of the assumptions wrong? Aren't many of the figures contradictory, and should they not be corrected?

Senator HILL (Minister for Defence) —No, I do not think there are flaws in the analysis at all. If there were flaws in the analysis, that is Senator Evans condemning industry. Industry in this instance recognises that the government's direction—

Senator Chris Evans —Not only do you wrap yourself in the plan, now you are wrapping yourself in industry.

Senator HILL —is the best direction, because what we want is a sustainable shipbuilding industry in this country that can provide the services that Defence needs—

Senator Chris Evans —This is the same industry that you said could not fulfil a contract.

The PRESIDENT —Order! Senator Evans, you have asked a question.

Senator HILL —as well as an industry that can provide jobs and economic opportunities for Australians, something that the Labor Party these days does not seem to be concerned with at all. So what I am suggesting is: Labor could help. Here is an opportunity for a win-win outcome—good for industry, good for Defence and, therefore, good for the country. Here is an opportunity for the Labor Party. But will they come on board in a constructive way? Will they develop some useful policy? Of course not!