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Thursday, 28 June 2018
Page: 4379

Senator PATRICK (South Australia) (16:13): I also commend this report to the Senate. The committee has done a fantastic job in covering a whole range of different aspects of naval shipbuilding in Australia. I also thank the secretariat for doing a fantastic job. I note that this is an $89 billion program, so we must give appropriate scrutiny to this program, and I think the committee has done a good job in summarising the program, or at least pulling together the entirety of the program and examining it.

Unfortunately, the $89 billion program that the government is running here is not achieving one of the key things that it set out to attain. The report basically covers this. We were expecting that the shipbuilding program would indeed be a sovereign shipbuilding program. There was an opportunity to leverage off this program not only from an economic perspective but also from a strategic perspective. In that respect, the government has failed. I'll just walk through some of the reasons why I say that; I'd hate to make a statement like that without grounding it properly.

The reality is that we started with the supply ships. We went to tender in 2014, and a decision was made in 2016. The tender did not involve an Australian company at all. We ended up basically contracting out two supply ships for the Royal Australian Navy to be built by a foreign company—a good foreign company. I mean no disrespect for Navantia, but they've taken that job and they've offshored it to Spain. In doing that, they've offshored the opportunities we had to learn in relation to shipbuilding, and we've exported the money. Indeed, in South Australia, we were suffering a significant problem in terms of redundancies at ASC. But we exported those jobs—they've gone—and we're seeing people being laid off as a result of that.

I know an icebreaker is not a naval vessel, but the report does suggest that we might look at this from a broader perspective than just naval shipbuilding and perhaps include some of the other ships that the government contracts. At about the same time as the supply ship contract was offshored, so too was the icebreaker for the Australian Antarctic Division. The lead designer of that project is Damen, a Dutch company, and that job has been exported to Romania. So, whilst we struggle to keep people employed in South Australia, through the valley of death, we now have an icebreaker being built, not with Australian steel, in a far-distant, foreign land.

The next project that we saw a contract being awarded to was the Future Submarine project. We went through a CEP, a competitive evaluation process, where we picked out a strategic partner. DCNS was the eventual winner of that CEP. DCNS is a very good submarine company. They're very experienced at designing and building submarines. However, we learnt recently, not just through the committee but also through estimates and a number of other sources that fedinto the committee, including things like FOIs, that the ASC—which is the centrepiece of Australian submarine shipbuilding and sustainment knowledge—has been excluded from the Future Submarine program. Originally, the French company, DCNS, wanted to partner with ASC in Adelaide. It turns out that the government directed the program to go in a different direction. It now appears we're about to sign a contract which commits to Australia having a French company in charge of the build here in Australia. I find that particularly disturbing, because we haven't even got to the design completion yet. That won't happen until 2022. We don't even understand the design and we don't even understand the cost, yet we are committing to having DCNS build these submarines.

Senator Ketter also mentioned the offshore patrol vessels. That particular project was awarded to a German company—once again, another good company, Lurssen; but it is a German company. They are actually subcontracting elements of the build to both ASC and to Civmec in Western Australia, but I point out that the awarding of that contract will have a significant impact on a very good Australian designer and shipbuilder, which is Austal in Western Australia. We seem to be bringing in companies from overseas and giving them large contracts so that they can then compete with these Australian companies on a world stage. That seems to be a very, very odd way to approach things.

The next was the Future Frigates. We were stunned last year in April when it was revealed by The Advertiser, that the three contenders for that particular project were Navantia, British Aerospace, or BAE Systems as they're now called, and Fincantieri—all good shipbuilders and designers; we actually do need a design—but in the tender they excluded the option for the primes, the overseas designers, to engage ASC or Austal as the builders of those ships. I've been in and around the defence industries for a long time and never have I seen a government exclude its own shipbuilders from being the shipbuilder. To me, that's a betrayal. It's a betrayal of Australian companies and Australian workers. It's kind of like saying, 'You can't build a canoe.' So I'm very, very disappointed. Indeed, when trying to find out who in government might have made that decision, the committee was met with cowardice. No-one wanted to stick their hand up and say, 'I made that decision for these reasons.' I found that particular approach pretty disturbing.

We have a situation where we're trying to build a sovereign naval shipbuilding industry. Our previous icebreaker was built in Newcastle by Carrington Slipways. Our future icebreaker will be built by a Dutch company in Romania. We have a situation where our former supply ship, HMAS Supply, which is still in the Navy, was built in Australia by an Australian company. Our next generation of supply ships are being offshored to Spain. You can see we're going backwards. Our previous offshore patrol boats were built here in Australia by Australian companies and now we've abandoned them. We've sidelined those companies and, in fact, are now relying on a German design and they are now directing the build. It's the same with our frigates and destroyers. Our previous frigates, the Anzacs, were built here in Australia by an Australian company, in totality. Our air warfare destroyers were built in Australia by an Australian company, in their totality. But that does not seem to be the case for the Future Frigates. I guess we'll see what happens in the next week or so as the government makes an announcement on that. Going to submarines, our previous submarine, the Collins class, was built in Australia by an Australian company. Our Future Submarines will be built in Australia but by a French company.

We find ourselves in a situation, and the committee's examined the evidence. We are almost unique in the world amongst First World navies and First World countries, basically sidelining our own shipbuilders. We're going to have foreign designers, which is okay—lots of countries do that—and we're going to have foreign builders. Not many First World countries do that. We've taken a massive step backwards in terms of sovereignty. If that was an aim of this particular program, and I believe that it was, and it should be, we have failed. I'm not exactly sure how we turn this around, but we do want to have a situation where the companies that are building our ships are Australian companies that retain the IP, have control over export and can work with the workforce as an integrated unit, and that's not happening here.