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Wednesday, 16 August 2017
Page: 5842

Senator XENOPHON (South Australia) (15:54): This is a matter of great public importance. There is an urgent need for the federal government to re-initiate the future frigate tender to permit Australian shipyards to take the lead roll in the ship build. The future frigate program is a $35 billion program and the proper execution of the future frigate project is itself part of a much broader $90 billion continuous naval shipbuilding plan. It is critical to Australia from a national defence perspective and it is also critical to the nation from an economic perspective.

When the government released its Naval Shipbuilding Plan on 16 May 2017, it stated:

This national endeavour is the most significant nation building project Australia has ever undertaken. Larger and more complex than the Snowy Mountains Hydro-Electric Scheme and the National Broadband Network, , the Naval Shipbuilding Plan that the government is delivering will engage all states and territories through their contributions to naval shipbuilding and sustainment of both current and future naval vessels, or as contributors to industry supply chains, or providers of national workforce development and skilling to meet the growing need for skilled naval shipbuilding workers across the sector.

Well, that's the plan. But let's look at the plan in practice.

Despite the fanfare and the rhetoric, over the past few weeks we learned slowly that the bulk of this national endeavour, this strategic defence program, will be executed by foreign companies. On 20 July this year at a hearing of the Senate Economic References Committee inquiry into the future of naval shipbuilding—I was there, with Senator Carr—it was revealed that Defence knew, and for some time had known, that ASC would have no substantive role in the Future Submarine program. And we now hear that ASC or Austal will have no substantive role in the future frigate program.

How did we hear this? Not as part of the defence white paper, not as part of any announcement of the Naval Shipbuilding Plan and not through FOI either. I tried that in May, only to be knocked back on the grounds, 'A release of the requested information for the request for tender would invite heightened public and media discussion on the suitability of the Commonwealth's Australian industry capability requirements.' Well, excuse me—this is a $90 billion program and $35 billion for the frigates, and heightened discussion and debate is something that should be avoided? That is absolutely wrong.

The public, the management of ASC and the workers of ASC have only found out the plans because the documents have been leaked to The Advertiser in Adelaide. And I might point out that, contrary to the minister's claim in the chamber today, this is not a leaked classified document; it is only a leaked embarrassing document. The FOI decision is under review as we speak, and I note that the FOI exemptions that have been used are the same ones used for the request I made about the competitive evaluation process for the submarines. Those exemptions were dropped as an Information Commissioner's review progressed. I expect that could well happen here as well.

To the minister, through you Mr President: most tender documents in this country are completely public. The idea that the release of an unclassified tender document could derail a process such as this is ludicrous. The decision on whether these documents could or should not be released is a matter likely to be determined by the AAT, because of the government's secrecy in relation to these documents.

But let's come back to the government's approach to the Australian continuous stable shipbuilding program. If we look back on the recent history of shipbuilding in this country, we will see that the Fremantle-class patrol boats were built by an Australian company. The Durance class supply ships were built by an Australian company. The Antarctic Division's icebreaker, Aurora Australis, was built by an Australian company. The Anzac class frigates were built by an Australian company. The Armidale class patrol boats were built by an Australian company. The Collins class submarines were built by an Australian company, and the air warfare destroyers were built by an Australian company.

Let's look to the shipbuilding endeavours of this government and the contrast. Under this government we have seen our supply ship build exported to Spain; our icebreaker built offshore in Romania; our future submarines being built by the French company, Naval Group—formerly DCNS; and now our future frigates being built by a British, an Italian or a Spanish company. Is this offshoring and fly-in fly-out shipbuilding approach seriously the government's approach to creating a sovereign shipbuilding capability? We are supposed to be trying to build a world-class sovereign shipbuilding base which will support thousands of long-term high-quality jobs directly, and thousands more through the supply chain, but, more importantly, for it to be the industry base that supports our sailors at sea in times of peace or conflict.

To do this I defer to the advice of one of the country's most experienced shipbuilding executives, David Singleton, the Austal chief executive officer. In a recent Sunday Mail article he said:

… we need to work on creating an industry that stands on its own two feet, free of government subsidy.

We cannot afford for the naval shipbuilding industry to be addicted to government welfare for its survival.

The key lies in exports and the key to exports lies in Australia owning the intellectual property behind every ship it builds.

The ability to conceive new ship designs, develop them and build them in Australia needs to be a clear focus of the future Australian shipbuilding industry.

It is critical that through our investment in submarines, frigates and patrol boats, the Federal Government secures the intellectual knowledge in the minds of Australians, resident in Australia, working in Australian companies such that we have the capacity to design new ships for ourselves and for our export markets.

Instead, we invite foreign companies to fly in and fly out of our country and to work primarily for profit. Under the arrangements set up by this government, we will see a foreign company take the lead in these nationally significant programs, a foreign company that will control the program, a foreign company that will install their own management teams in Adelaide and elsewhere, a foreign company that will choose the workforce, a foreign company that will control the intellectual property and a foreign company that will determine the shipyard's strategic direction.

When an export opportunity arises, it won't be for the local shipyard to determine if we can export; the decision will be made in the context of the corporate plans of someone in Paris, Rome, Madrid or London. It is a decision that will be made without Australian government consultation or control, by virtue of the documents that have been disclosed. The decision to construct this program in this way is fundamentally flawed. I'm not surprised by this, noting that the government made every major decision in this program before it had come up with a plan. The naval shipbuilding plan was released after the submarine CEP, after the patrol boat tenders, after the tender for the OPVs, offshore patrol vessels, and after the future frigate tender. This is really a cart-before-the-horse approach.

Finally, let me give the chamber some key data points on the likely and feared shutdown of ASC. Firstly, the submarine CEP was run with Defence not intending to have ASC having a role. ASC is going to be broken up into three entities. The first is submarine sustainment. I note that the naval shipbuilding plan did not state that the Collins sustainment would stay in Australia—that it could go elsewhere. Secondly, Australian Naval Infrastructure Pty Ltd and ASC Shipbuilding are entities, which is basically a workforce, and the future frigate tender was released with no role for ASC or Austal. Defence have been desperate to keep me from seeing those documents in the exhaustive FOI process I have been going through. They have said they don't want heightened media awareness of this and public awareness, and that is wrong. There is nothing in the ASC order book. Indeed, if Fassmer, who have teamed with Austal for the OPV, were to win the OPV competition, then ASC would have nothing.

How must it feel to be a worker at ASC today? What impact will today's news have on the ASC team spirit that has been built up as it has successfully and efficiently built the air warfare destroyers. We have recently seen Nos 2 and 3 beating world-class benchmarks. There has been real reform, real productivity and real efficiency. What impact will it have on the ASC? What impact will it have on workers as a result of future employment uncertainty and as they contemplate working for a foreign company that they have no understanding of?

This future frigate tender is flawed. It is strategically inept. It compromises our sovereign capability because we will lose the intellectual property. We will lose the ability to control our destiny when it comes to naval shipbuilding. This is the biggest procurement project we have seen—this $90 billion plan, which I know all of us support. The government needs to re-initiate the future frigate tender to permit Australian shipyards to take the lead role in the ship build. The Minister for Defence, who I believe has enormous integrity—and I have enormous regard for her competence, her capacity and her fundamental integrity—did not directly refute any of the comments that I made in relation to this. The Minister for Defence may have great integrity, but this tender process for the future frigates absolutely does not.