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Monday, 19 September 1994
Page: 944

(Question No. 1591)

Senator Margetts asked the Minister for Defence, upon notice, on 8 August 1994:

  (1) Since the policy of self reliance has been adopted, please provide a list of major capital projects undertaken by the Australian Government and those planned in the future with their up-to-date costings.

  (2) For each of the projects named in (1), at the time the projects were initially costed, please provide details of the market prices of buying the equivalent from overseas compared with the costs of building them ourselves.

  (3) Please detail how market prices currently compare with any revised budgets for projects constructed in Australia.

  (4) Is self-reliance economically and technologically feasible given that a buyer's market currently exists in the global arms trade.

Senator Robert Ray —The answer to the honourable senator's question is as follows:

  (1) A list of significant major capability projects undertaken by the Australian Government and those planned in the future are at Annexes A and B.

  (2) Defence is required to abide by the Commonwealth Procurement Guidelines which include open and effective competition. This principle is usually implemented by an open tendering process whereby both Australian and overseas companies are able to tender for any particular project. It is not feasible for all Defence requirements to be economically developed and supplied locally, therefore tenders usually include a mix of Australian and overseas industry. Where strategically necessary or economically feasible, Australian Industry Involvement has been maximised; for example in the construction of the Collins Class submarines, Anzac ships, minehunters and other projects. However, the tendering process does not provide for seeking separate tenders comprising only local suppliers or for equipment being exclusively purchased from overseas. To do so would significantly increase the costs of tendering to both industry and the Commonwealth. Also direct comparison of local and overseas equipment is not always possible because of changes/adaptations of equipment to meet specific Australian strategic and environmental considerations. Thus it is not possible to provide the information requested.

  (3) The latest project approvals reflect the changes, or anticipated changes, in price for each of the projects detailed at Annex A. Unless the Department was to retender for the particular project there is no precise way to determine the current market value for an ongoing project. As the original approval is based on the results from open tendering the original project cost estimate is in all probability based on market prices. Subsequent price movements would be similarly based.

  (4) The policy of self-reliance has been a central feature of defence policy since the early 1970s. The policy was identified as a primary requirement in the 1976 White Paper. The concept has been refined in subsequent reviews of defence capabilities and reiterated in the 1987 White Paper—Defence of Australia (DOA 87) and the Strategic Review 1993.

  In considering self-reliance—which does not mean self-sufficiency—the Defence organisation is considering its capacity to provide for the self-reliant defence of Australia and its interests. As identified in DOA 87, it would benefit our self-reliance and local industry if all our defence requirements could be developed and supplied locally. Such a course is not feasible for a country of Australia's size. Local industry can be less

susceptible to interruption of supply by interdiction or decisions by foreign governments and is more likely to treat Australia's military needs as a high priority. The capacity to maintain, repair, modify and adapt defence equipment to the Australian environment, independently of overseas sources, is of fundamental importance for our combat effectiveness in all levels of conflict. Recognising that Australian industry cannot be expected to be competitive across the full range of defence requirements, defence policy for industry is an integral part of defence planning and sets priorities for the use of resources for the development of local industrial capability. Those priorities include the repair, overhaul and adaptation of military equipment fundamental to Australia's defence and a range of technology and supply and support capabilities that meet the longer-term needs of the ADF in an acceptable balance of benefits and costs.

  A buyer's market may exist in the global arms trade but that market is for specific items, for many of which Australia would have neither a requirement nor an interest. It is against this background that defence projects are developed and procurement alternatives evaluated. If, as you suggest, it is a buyer's market for arms then that will strengthen Australia's position in obtaining technology transfer, training and other support arrangements to enhance self reliance.

Annex A



Approval at 30

Original Jun 94 Basis

Approval Apr 93


Project Date Price $m Price Basis $m


Collins Class Submarines May 87 3892 Jun 86 4966

ANZAC Ships Aug 89 3594 Apr 88 4729

Australian Frigates Aug 84 859 Dec 83 1212

Seahawk Helicopters May 86 610 Dec 85 664

RAVEN Aug 84 100 Apr 84 627

F/A-18 Hornet Oct 81 2427 Aug 81 4544

Blackhawk Helicopters Sep 86 284 Sep 85 647

F-111 Avionics Update Aug 88 220 Apr 88 484

JORN Dec 90 970 Apr 90 1080

Australian Light

Armoured Vehicle Aug 91 256 Apr 91 277

PARAKEET Oct 90 168 Dec 92 173

Small Arms Replacement Nov 85 166 Apr 85 201

PERENTIE Nov 89 124 Dec 88 217

P3C UPDATE Aug 92 672 Apr 92 733

LADS Aug 81 22 Apr 83 72

Chinook Capability Aug 86 67 Aug 81 71

Minehunter Coastal Aug 93 1162 Apr 93 1162


Annex B


Unapproved Projects Estimated Cost Greater Than $200m

FFG Progressive Upgrade

Fremantle Class Patrol Boat Life of Type Extension

Hydrographic/Oceanographic Ships

ANZAC Ship Helicopter Acquisition

Heavyweight Torpedo

Overlander Field Vehicles and Trailers


HF Radio Network Modernisation Program

Aerial Reconnaissance, Surveillance and Fire Support for Land Forces

Lead-in Fighter Capability

Strategic Airlift Capability

Tactical Airlift Capability

Airborne Early Warning and Control System

F/A-18 Upgrade

Ground Based Air Defence Weapon System

Light Tactical Airlift Capability

Unapproved Projects Estimated Cost Between $60m and $200m

Harpoon Missiles

Active Expendable Decoy

Evolved Seasparrow

Fleet Support Vessels

ASW Weapons Capability

Wagtail Tactical Radio


Air Defence Radar Replacement

Air Command Support System

ADF Air Range

Tactical Air Defence Radar

EW for Transport Aircraft

EW Self-Protection for F/RF-111C

ADF Aerial Target System

Air to Air Weapons

Weapons System Support Capability