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Wednesday, 13 September 2017
Page: 7182

Senator GALLACHER (South Australia) (16:49): I too rise to make a contribution in this debate on an order for the production of documents in relation to shipbuilding. The first thing I want to say, as the chair of the Foreign Affairs, Defence and Trade References Committee, is that we get notified every year, every estimates, of the projects of concern. It's intriguing to note that all the projects of concern currently listed by the department are a result of limited tender. If you look at the projects of concern, they are all limited tender projects. So what we're asking for here is more clarity, more transparency, more openness, about the expenditure of billions of dollars worth of taxpayers' money, because we do not want to end up with another project of concern. I will give one example of a project of concern: the OneSKY project, which Defence is a huge partner in. It ended up with one preferred tenderer, at a cost deemed not to be value for money for the Commonwealth. That was the outcome of $400 million-plus of Defence's expenditure.

Senator Payne: Not a tender run by Defence.

Senator GALLACHER: I take the minister's interjection. It was not completely run by Defence. But it would be no surprise to those people in Defence that the chairman of Airservices Australia is a former Chief of the Australian Defence Force; so they have a fair bit of sway in all areas of Airservices. Anyway, I will get back to the point of concern. I sat through the contributions from Senator Xenophon and Senator Carr. I'm not going to repeat the statements they made, but it's really intriguing to note that, out of all the First World navies, we are the only one to ask foreign shipbuilders to build in country without requiring a local partner to lead the program. There are countries that do that—Belgium, Saudi Arabia, the Philippines, New Zealand, Norway, Indonesia.

Senator Payne interjecting

Senator GALLACHER: Look at First World navies. We are a First World navy, and we are asking a foreign shipbuilder—we accept that the foreign design is probably applicable—for a local build. All the nations that have local design, local shipbuilder, local build have moved from foreign design, local shipbuilder, local build. So that's where you should start. But Australia's going to be an outlier, in that we're not requiring the people who have capacity to build ships in Australia to be part of the process. It is astounding that the RFT actually writes them out. We're going back to the days pre-Senator Payne, to the former minister, who did say in this chamber that he wouldn't trust ASC to build a canoe. That came around after an Australian National Audit Office report said that there's no lack of productivity with the workers at ASC; it's the fact they have to do the job three times—not once, not twice but three times—because Navantia and the other people who gave them the plans weren't giving them to the workforce in a way that they were able to do it once, on time. The Australian National Audit Office said there was no lack of productivity amongst the workforce; they simply had to do the job multiple times.

The government does not realise that we've gone on from that stage and that people are skilled. There is tremendous learning vested in ASC. You've paid the price. You've got management right. You've got them on track doing a good job. But you actually wrote to or rang three of the preferred tenderers and said, 'You don't have to engage the workforce and you don't have to talk to them.' That seems me to be quite astounding. And we wouldn't have known about this unless someone had leaked a document.

Let's go to Austal. Senator Carr more or less said it all. This is a company that sells ships to the Vikings! It sells ships to Denmark. It is building ships in the United States. The evidence we had before the committee was very explicit and clear—there was tremendous engagement with all of the preferred contractors. There was tremendous engagement with both ASC and Austal until Mr Gillis made those phone calls. As Senator Carr says, the committee will have to ask Mr Gillis about the intent of those phone calls.

But what's really tragic here is that there is probably a one-off opportunity—I accept the jobs will be in South Australia. I don't think anybody's arguing that there's not going to be a lot of jobs created and sustained for generations in South Australia. But what we really want is someone who's going to take charge of the export potential. If we're really serious about our sovereign shipbuilding potential, we should use this enormous investment of taxpayers' money to expand the skill, to get the people into the training college, to get the design capability, to build ships and sell them to other people. Despite all the criticisms of the motor vehicle industry, we know that, as it's approaching its closure—$1.2 billion worth of cars into the Middle East. When the dollar was 72c, we were building Camaros for the American market. The California police would order stuff from Australia. That was because they had design capability built out of investment in manufacturing.

We have an opportunity to do that in shipbuilding now. We can not only make these ships with an Australian workforce; we can get that Australian workforce to such a place that they will be making, designing and exporting. And that's the vision—and I have to say this in this chamber—that the CEO of Austal is selling. And he sold me. Without any taxpayer subsidy, they can build big ships for the American navy. Without any subsidy, Austal and Incat, a Tasmanian company, lead the world in design and sale of aluminium ships. I'm up for the challenge. They wanted to team with ASC, cut steel and make steel ships. That's what this is about. With $35 billion going in, what you get is a fully productive industry in Australia capable of exporting to the rest of the world and making $10 for every dollar that goes in. That's the challenge here, which I don't see either Minister Pyne or Minister Payne taking up.

When you have that RFT leaked, it looks as if you want to write out Austal and write out ASC. If their evidence to the committee is that all discussions ceased forthwith, well, there are, seriously, some questions to answer about an incredible opportunity for Australia and an incredible opportunity for manufacturing in Australia. I don't think that politics should have anything to do with this. Where practical and possible, we should be able to contribute as an opposition, or Senator Xenophon as a participant in this Senate, for a good outcome for Australia. The way we're going at the moment, we're going to end up, I fear, with another project of concern. A lot of those on the other side—and I don't include the minister in this—who are relying on the bureaucrats in Defence have ended up with projects of concern. When we were in government, we ended up with projects of concern.

So what we need to do is have as much transparency as absolutely practical and possible, recognising there is always commercial-in-confidence. But someone needs to answer to the committee and the taxpayers why we're not looking at this export opportunity. It may need to grow in the three, five or 10 years. Why are we saying we can only have BAE or Fincantieri? The reality is: where is their interest going to lie at the end of this? Their interest is going to lie with their nation. Why don't we have sovereign capability in Adelaide or in South Australia. The supply chain which grows from that would be enormous. It really is quite mystifying that we have ended up in this situation. What we have been asked to believe is: 'Don't worry; there'll be lots of jobs.' Well, I think taxpayers are entitled to more than just jobs; they're entitled to an export opportunity which should be grown out of this project in the whole of Australia.

Question agreed to.