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Finance and Public Administration Legislation Committee
05/05/2016
Estimates
FINANCE PORTFOLIO
ASC Pty Ltd

ASC Pty Ltd

CHAIR: We are now dealing with ASC Pty Ltd. I welcome Mr Stuart Whiley, the interim Chief Executive Officer of ASC Pty Ltd; Mr Mark Lamarre, Chief Executive Officer of ASC Shipbuilding; and other officers. Mr Whiley, I invite you to make an opening statement should you wish to do so.

Mr Whiley : No, I have no statement.

CHAIR: Mr Lamarre, would you like to make an opening statement?

Mr Lamarre : No, I have no statement.

Senator WONG: Mr Lamarre, I think on the last occasion I asked you a question about job losses since February. I think we discussed approximately 900 jobs to that point.

Mr Lamarre : Correct. That was from, as I understand, November 2014.

Senator WONG: Correct. Have there been any further job losses since we last had a discussion—since February?

Mr Lamarre : Since the last Senate estimates, we have had 87 further positions reduced.

Senator WONG: Since September 2013, what is the total number of jobs lost at ASC?

Mr Lamarre : For the number from September 2013, I would have to take that on notice. I do not have that information.

Senator WONG: It is 987, just under 1,000 since—what was the commencement?

Mr Lamarre : November 2014.

Senator Cormann: But you have to break that down again, because they are not actually all job losses. We went through that last time. There are obviously a large number that relate to contractors that are there for very specific tasks and, when the task comes to a close, it is like when you build a house. The painter is there while you need to do the painting. The electrician is there while you need to do the electricity. The gardener is there while you need to do the garden. But they do not stay around, ongoing, when the specific task for which they have been contracted is concluded. So you have to appreciate that in the same context.

Senator WONG: I am happy to say 'at Osborne' if you would prefer.

Senator Cormann: Again, there is a distinction between contractors and employees.

Senator WONG: I am actually trying to accede to your request around timing. I think we all understand the number you gave me includes both direct employees and contractors and contractor employees—correct?

Mr Lamarre : That is correct.

Senator WONG: I am happy to place on record that I understand that that is the case, Minister. Has there been any change to the AWD schedule?

Mr Lamarre : Yes. We have formalised the next SCR, as we call it.

Senator WONG: SCR? Just remind me about that.

Mr Lamarre : I would have to get back to you on this—schedule change review or something. I am sorry; I would have to get back to you on this.

Senator WONG: Okay.

Mr Lamarre : But it is the latest schedule, which does not change the delivery dates that I quoted to you last time I was here; it is just formalised now in the system.

Senator WONG: Okay. Just remind me of the delivery dates. Sorry, I do not have all the transcript from the last time.

Mr Lamarre : Ship 1 has been revised to June of 2017; ship 2, July of 2018; and ship 3, December of 2019.

Senator WONG: You gave evidence on the last occasion about job losses by the end of 2018. You said:

We are seeing a steady decline between now and the end of 2018, where we will have nothing but just a few folks on this program through 2019 … We are ramping down to almost just a few employees by the end of 2018 …

I know there has been an OPV announcement—I am going to give you the opportunity to talk about that—but I am trying to understand what further, if any, losses of jobs are anticipated over the next year and a half—in 2017 and 2018.

Mr Lamarre : I have a view today through to the end of 2017. The recent announcements for both submarines and OPVs make it impossible for me to have a solid view about 2018. There are so many variables in this case. First off, the last time we spoke about manning we talked principally about subcontractors and contractors, and it was largely around production and production management. I think that it would be best that I quote every person who is under ASC's management going forward—that includes all of our salaried engineers, planners, purchasing agents and so on—because as we keep track of this going forward they will all be affected in one way or fashion with these recent important announcements that have been made. What that brings us to today is that, after the 87 that we have been reduced by since February, we are in total manning under ASC control and on shipbuilding of 1,747. There will be some minor perturbations, both reductions and additions, between now and sea trials for ship one, which is in September, and the launch of ship two in December this year, but we do not expect any significant change. We expect by June of 2017 to be down to 1,130 which would be a 617-person reduction in total numbers, and by December 2017 down to 1,095, which would be a further 35 or so. As I said, right now 2018 is very hard to speculate on with the new opportunities that will eventuate from both submarines and ship announcements.

Senator WONG: Basically between now and the end of next year you are looking at around 640. Would that be about right? I think that is right.

Mr Lamarre : That is correct, roughly.

Senator WONG: Can I go now to the offshore patrol vessel announcement that the government has made. Has the ASC been advised, formally or informally, that it will be building the OPVs?

Mr Lamarre : We have, similar to the public announcement, a CEP process in place. What has been announced is that the OPV program will start in Adelaide. The CEP process has not concluded. Since we are the only shipyard in Adelaide I would expect we would have a role, but the contracting structure is yet to be determined. That could be under a number of different scenarios.

Senator WONG: I was going to say that, because the public announcement was 'Adelaide', not 'ASC'.

Mr Lamarre : Correct. But I am very excited about the announcement clearly.

Senator WONG: There is only one shipyard.

Mr Lamarre : I think it is very good obviously for South Australia and for ASC. On the back of the performance that we are seeing in both submarines and ships I would expect something to come out of that. But, again, the CEP process is managed by Defence and it has to be—it is under their management.

Senator WONG: According to the timeline the build for the OPVs will not start until 2018. You referenced that. Do you have the capacity to sustain your shipbuilding workforce until then?

Mr Lamarre : The OPV is the only program that has been announced that will affect our workforce between now and 2018. Those 640 jobs that we talked about, irrespective of OPV, will be reduced.

Senator WONG: Can you tell me how many of those would be in each of the categories we discussed?

Mr Lamarre : We would have to take that on notice. Is that something you would like us to do?

Senator WONG: I am trying to get a sense of direct employees, contractors et cetera. I think the categories you used in a previous answer—so that would be useful, thank you.

Senator XENOPHON: Surely there has been some form of workforce analysis carried out in this regard—hasn't there?

Mr Lamarre : We work with the information that is available at the time it is available. There have been a lot of moving parts with respect to the program, with respect to the schedule and with new partnerships we have put on. For example, Navantia has been brought on to work with us in the program, which has changed our approach to testing the ship and to compartment completions. So there are a number of variables that affect each of these categories.

Now, with the announcements coming—with OPV, and we have already known about the future frigates, but we have now seen a down select—and with what is going on with submarines, they open up opportunities, particularly for some of our nonproduction trade workforce to make transitions sooner than we would have expected. So there are a number of balls in the air that need to be managed. As the CEP comes closer to the end we will have a much better understanding of that over the next several months.

Senator WONG: I guess there is sort of a capacity issue—I think that is what you were asking, essentially—

Senator XENOPHON: Yes—

Senator WONG: You have 600 people going, on top of the 900 to date—yes?

Mr Lamarre : Since November 2014.

Senator WONG: Since November 2014. Are you going to have the requisite skills and capacity for the work that is going to be provided?

Mr Lamarre : It all depends on a number of factors, and timing. The short answer is that I believe so, but there are a number of variables related to which partner is selected for the OPV design; what degree, if any, of customisation is done to the design to meet specific Australian needs; the contracting model that CASG chooses through the CEP process; and a number of other factors that will affect the timing of the start fabrication of the work and the workforce.

One of the things that has been—

Senator WONG: Meaning, the longer it takes then the more difficult it is for you to maintain the workforce. Is that what that answer means?

Mr Lamarre : Sure. If it bleeds into 2019 it will be a different thing entirely. But all the things I am seeing in my discussions with the CASG are that we are on drumbeat to move forward. We are working with them currently on something that I think is very positive—we are looking at workforce planning across Australia with respect to shipbuilding programs that include WA, to see if we can come up with the right outcome for labour—to manage the programs and maintain the labour that we need which, as I have stated before, will help us significantly with the right outcomes for the future frigates.

Senator XENOPHON: I just want to ask whether the ASC has been briefed on the outcome of the submarine CEP?

Mr Whiley : We have had no briefing as yet, no—other than the Prime Minister's announcement.

Senator XENOPHON: Right. So, no additional briefing in respect of that?

Mr Whiley : No.

Senator XENOPHON: Are you expecting to get one soon?

Mr Whiley : I think there is a bit of work to be done in the CEP process in terms of Defence and DCNS getting together. Once that beds down I think we will get a briefing—

Senator XENOPHON: Okay. So right now, ASC knows as much as the rest of Australia does about that very exciting announcement of a week ago?

Mr Whiley : Yes.

Senator XENOPHON: Can you tell us what precise involvement the ASC will have in the future submarine program?

Mr Whiley : No, I cannot tell you what precise involvement.

Senator XENOPHON: Right. What does the ASC understand to be the local content in respect of the future submarine program?

Senator Cormann: I just have to enter 'pause' here. We have had this conversation several times before. As you know, the procurement of the next generation of submarines is a procurement that is managed by the Defence portfolio. It is not a procurement that is managed by the finance portfolio. ASC appears here because I am the shareholder minister for ASC. ASC, obviously, is going to play a key role in the context of this procurement, but there are appropriate and necessary processes that are yet to be concluded and are currently taking place—not in this portfolio, but in the Defence portfolio. These sorts of questions are not questions that a potential supplier can answer; these sorts of questions are the questions that somebody who is managing the procurement can answer, so you should really direct them to the Defence portfolio.

Senator XENOPHON: Well, if I may—through you, Chair: the question I asked was, 'What does ASC understand to be the local content of the future submarines?' Mr Whiley—

Senator Cormann: But ASC is a potential supplier—

Senator XENOPHON: Having made—

Senator Cormann: ASC does not set this—

Senator XENOPHON: Chair, I am just trying to ask this: either ASC knows what the local content will be or not. If they do not know, as a result of there not being information from Defence at this stage, I will have to cop that answer.

Senator Cormann: The announcement that the government has made is that all 12 submarines will be Australian built. That was obviously a very significant announcement that the government has made, and it provides exciting opportunities for ASC and other defence industry related businesses around Australia. The specific questions that you are pursuing ought to be addressed to the defence portfolio.

Senator XENOPHON: So, it is clear then to you, Minister, that ASC does not know, at this stage, what the local content will be in respect of the future submarines.

Senator Cormann: ASC would not be expected to have that type of information at present, because ASC is likely a future supplier as part of the procurement that is yet to be finalised. These sorts of judgements and decisions are part of the procurement process, which is not something that ASC is managing.

CHAIR: Senator Xenophon, having listened to your question—and I understand why you want to know the answer to—it should be addressed to Defence, who are responsible for the procurement.

Senator XENOPHON: Let me put this question to—

CHAIR: Well, because you could ask that of any potential supplier, and it is only reasonable that potential suppliers would be informed via Defence.

Senator XENOPHON: But, if I could respectfully put this question to the Minister: you expect, as the shareholder minister for the ASC, that, as a prudent, well-managed government business enterprise, they would have business plans in order to plan for the future in terms of the future workforce and capital requirements, for instance. So, knowing what the local content is would not be an unreasonable question.

Senator Cormann: It is an unreasonable question, given where the process is at. What I can say—and as I have said before—as the shareholder minister of ASC, I am very keen to do everything I can to ensure that ASC is as successful as possible; and, as the shareholder minister of a potential supplier in the defence industry space, I am very keen for them to be successful in participating in as many relevant procurements as possible. But, the relevant decisions—

Senator XENOPHON: Right now they know as much as everybody else.

Senator Cormann: around procurement—the suggestion that is implied in that question is that somehow you believe that the government should go outside of its established procurement processes and probity requirements, and the integrity of the process, to somehow give it a heads-up to its own business before certain processes have been finalised.

Senator XENOPHON: No, no, no. Don't verbal me, Minister.

Senator Cormann: That is the implication of what you were saying.

Senator XENOPHON: No, it is not the implication. It is your implication; it is not my implication.

Senator Cormann: The procurement is managed by Defence. There are certain processes that have to be bedded down, consistent with the property and integrity requirements of these sorts of procurement processes. You would appreciate that this is a very, very significant procurement, both in terms of its importance to the defence of Australia, but also in pure dollar terms. There is a body of work that is still being done and is being done by the defence portfolio, appropriately. ASC, as a supplier in the defence market—in the submarine building and maintenance market in the broad—is not in the position to make comments about the procurement that is managed by the defence portfolio.

Senator XENOPHON: Since the announcement on 26 April, you think it is satisfactory that in that week and two days the ASC has not received any additional information other than the Prime Minister's public statements and media release?

Senator Cormann: The commitment that the government has made—we have gone through a very comprehensive, competitive evaluation process, which led to the announcement of the international partner. We publically announced—very openly and transparently—that there is a further body of work now to be done with DCNS. That is what you would expect to happen and that is also what Mr Whiley has indicated.

The commitment that the government has given is that we will work to maximise local industry involvement. DCNS gave us an Australian industry involvement plan which was assessed by Defence as part of their bid, but questions in relations to these matters are matters that should be addressed to the Minister for Defence and the defence portfolio.

Senator XENOPHON: Finally on this point, can ASC tell me whether they have been given any indication from Defence as to when they will receive a briefing on the outcome of the CEP?

Senator Cormann: No.

Senator XENOPHON: Can I go to the AWD. Mr Lamarre, at the last estimates you indicated significant productivity gains with respect to ship 2, 39 per cent, and ship 3, 50 per cent, versus ship 1. That is obviously terrific news. Can you please update me briefly on where we are now with the three ships. I think you indicated to Senator Wong that there should be a launch of ship 2 by Christmas time—is that right?

Mr Lamarre : Operationally for the ships, we have just lit off the main engines for ship 1, which is a very important step in getting to trials in September, so that is tracking. Ship 2 is meeting its targets to go to launch. In terms of per cent improvements, they are the same as they were in February. We are still maintaining 39 per cent on ship 2 from ship 1, and 18 per cent on ship 3.

Senator XENOPHON: That is 18 per cent on top of that? So that would be even more than a 50 per cent improvement?

Mr Lamarre : We are basically in the same place we were when we spoke last, in February. This is not a journey where we have arrived. We still have work to do. We have put another important initiative in place since we last spoke in relation to ship 3's structural integration, and we have our first four units done. We are currently tracking. Again it is early days, but I expect that we should see 140,000 man hour savings out of that effort, or around $7 million, so there is more opportunity. That is the long way of saying that I expect ship 3's improvements over ship 2 to continue to grow from 18 per cent.

Senator XENOPHON: Can I just go to the OPVs. I note that Senator Wong has raised this. When do you expect the work on the OPV to start?

Mr Lamarre : In 2018.

Senator XENOPHON: Early or late?

Mr Lamarre : Again, there is a lot to understand—a lot of water to go under the bridge—before we know exactly when that happens.

Senator XENOPHON: I do not want to say this in an inflammatory way, but in the past Defence has occasionally been—some would say often or almost always—off target when it comes to getting second-pass approval. That is just a reality, given the nature of second-pass approvals. Have you factored that into your planning—that it may not happen when it has been planned to happen—or do you just stick to what you have been told by Defence?

Mr Lamarre : The only option I have if it does not happen is to continue to reduce my workforce in accordance with the work that I do have. My controllable in this regard is how we operate the business and how efficient we become, so we make it obvious to CASG that we are the place to do the work. That is our sole focus.

Senator XENOPHON: Has there been analysis within ASC as to the inefficiencies and the costs involved in the program by switching the build location of the OPVs from Adelaide to Perth as has been foreshadowed?

Mr Lamarre : Could you ask the question again?

Senator XENOPHON: The plan, as I understand it, is that the first two OPVs—

Mr Lamarre : We are not certain how many.

Senator XENOPHON: You are not certain. It could be one; it could be three. You do not know?

Mr Lamarre : There is a lot of work to be done. We are currently working with CASG on a number of things. One of them is an industry-wide manning plan that will take into account the patrol vessels that are being done on the west coast, the OPVs starting in Adelaide and a transition of work of the OPV program at some point. We are not sure exactly what that is yet. So we have been specifically working with them on risk management techniques on how to efficiently transfer that because, as I understand it, CASG has a very rational policy or goal of having a minor-warship shipyard and a major-warship shipyard. Again, I am very happy that the indications are that we will get started.

Senator XENOPHON: So you do not know whether it is going to be one or two?

Mr Lamarre : We are not certain yet. As I said, there are a number of things that have to be worked out.

Senator XENOPHON: Has there been any analysis done of the inefficiencies involved in transferring the build from one location to another?

Mr Lamarre : As I said from the beginning, the inefficiencies were tied to the Future Frigate program, in my view, and, if we did not retain capability in Adelaide, we would have a very predictable and expensive outcome on the much larger program of $35 billion.

I see this decision by government as a very positive step. Yes, there will be a cost, having the OPV program run in two shipyards. Our assessment of the costs associated with going dark in Adelaide prior to future frigates was much, much larger—an order of magnitude larger—so it is a good investment, in my view, is the long way of saying it.

Senator XENOPHON: I want to get through a number of other issues. The minister has assured me, in an answer to question on notice No. 2992, that ASC as a Corporations Act company, which operates at arm's length from the government with an independent board responsible for the management of the business—that is pretty axiomatic isn't it? It is a pretty straightforward statement by the minister. You operate independently of the government?

Mr Whiley : Yes.

Senator XENOPHON: The minister also said that it is the government's expectation that the board of management of ASC place it in a competitive position for any future work. We have heard that in terms of the AWD efficiencies and the like, correct?

Mr Whiley : Yes.

Senator XENOPHON: That is consistent with your view. Do you seek advice or instructions from Finance on the strategic direction of the company, or does Finance offer that advice?

Mr Whiley : No, we do not. There is an annual process where we do a strategic plan that is sent to Finance, but we operate as an independent arm.

Senator XENOPHON: Do you seek advice or instructions on the day-to-day direction of the company or does Finance offer that advice?

Mr Whiley : The answer is no.

Senator XENOPHON: Do you seek input or advice on, say, public speeches, statements or media releases from Finance?

Mr Whiley : We take input from both stakeholders on matters of a public address, because of the potential impacts against those stakeholders, and that is consistent with working in enterprise.

Senator XENOPHON: The usual thing is, if you are going to put out a media release on an important issue, you would run it by Finance—is that right?

Mr Whiley : If we think it is appropriate, yes.

Senator XENOPHON: The reason I am asking these questions is I have asked for correspondence—documents, emails et cetera—that are passed between Finance and ASC on these issues. I have three charges letters wanting, I think, something in the order of $1,600 in addition to the 15 free hours of searches and processing. So, on the basis of it, I just thought there must be a lot of correspondence between the two. I have already sent a cheque for the first deposit, so there you are: I am doing my bit to reduce the deficit.

Mr Whiley : That is good.

Senator WONG: On 7 April Mr Pyne made some public comments about Arrium's ability to win the contract to supply steel for the OPVs. Are you aware of these, Mr Lamarre?

Mr Lamarre : I am not.

Senator WONG: He explained why it would be very surprising, if Arrium were to win the contract. He said you could assume they will win it—is that something that ASC are aware of?

Mr Lamarre : I am sorry, I am not aware of—

Senator WONG: There has been no indication from government to you that Arrium has to have the contract for the steel for the OPVs?

Mr Whiley : Arrium does long product—

Senator WONG: I know: that is my point.

Mr Whiley : No, we are not aware of any.

Senator WONG: I think you answered this in response to a question from Senator Xenophon, and it is a question of timing and effect on workforce. In case I have misunderstood it, you gave me some figures on job losses, assuming that the cutting of steel on the OPVs in 2018 was achieved—is that right? I am trying to get a sense of, if the timetable is, say, pushed out by six months to a year, what is the impact on workforce and capability?

Mr Lamarre : If it is pushed out a year, we are currently anticipating a significant drop, as I gave in evidence last time, by the end of 2018. I think I said we were going to be down to roughly 100 now. That was just for the production workforce and production management workforce. There will be other salaried workforce—engineers, planners and so on—on top of that who, as I see it already, will have an opportunity very soon, when we see the Submarine IPT growing by several hundred over the next couple of years. Am I too optimistic? I think that is where we left it. We see a very significant reduction by the end of 2018.

It is important to stay on the drumbeat of starting fabrication in 2018. All the indications I am getting from CASG is that that is a major priority, and that was taken into account during the selection of the potential platforms. The Chief of Navy was at the shipyard yesterday. He seems in alignment with that goal of 2018. That is what I have in the way of information to work with.

Senator XENOPHON: I have some more questions in relation to the icebreaker. The contract was signed for a Netherlands based company and an overseas build. The government has said that there no Australian company that bid for that. Can you tell me whether the ASC considered bidding for the icebreaker at any time?

Mr Lamarre : We did consider it and concluded that the timing was not appropriate both for our capacity and for our capability in connection with the AWD program at the time. So we decided not to bid.

Senator XENOPHON: This was considered several years ago?

Mr Lamarre : That is correct.

Senator XENOPHON: Because of the slippages, if you like, in that scheduling, would you now have a capacity in respect of the icebreaker?

Mr Lamarre : I think we are dealing in hypotheticals at this point. You have a contract that has been signed with a competitor.

Senator XENOPHON: Let me put it to you fairly this way: you considered bidding for the icebreaker, but at that stage you thought it was not appropriate to bid for it because of scheduling issues.

Senator Cormann: It actually is a bit more than that. If I refer to the 2013 Future Submarine Industry Skills Plan which, as I understand it, preceded our period in government, it states that the common user facility in Adelaide which supports ASC is not capable of accommodating vessels of the size of an icebreaker without significant infrastructure upgrades and significant cost. For example, the current shiplift would be required to be significantly lengthened in order to carry vessels the size of the replacement supply ships. Of course there was a particular need which required a decision by government. Again, this is not a procurement that is happening through the Finance portfolio; this is a procurement that is happening through the Environment portfolio.

Senator XENOPHON: I am more grateful than usual for the minister's answer, but I am trying to understand this. Mr Lamarre, based on what the minister said, which I am not disputing, does that mean that with some infrastructure investment there could have been an ability to build the icebreaker?

Senator Cormann: I am going to be more helpful here—

Senator XENOPHON: I am sorry, Senator. Chair, I am asking Mr Lamarre.

Senator Cormann: I am going to be even more helpful here. The other issue of course is that icebreakers require specialised materials and construction techniques that are not used in regular shipbuilding. A single shipbuild in Australia would have been prohibitively expensive. That is why to consider the sort of infrastructure investment that would have been required to build one ship of such a specialised nature—

Senator XENOPHON: Chair, I am asking Mr Lamarre.

Senator Cormann: would not have been possible.

Senator WONG: Chair, he does it all the time. We get a little script.

Senator XENOPHON: Chair, I asked Mr Lamarre a specific question on the icebreaker.

CHAIR: Senator Xenophon, you are entitled to ask a question and, similarly, the minister is entitled to take it and to respond on behalf of the officers. That is this case.

Senator XENOPHON: Is that this case?

CHAIR: It is the case.

Senator XENOPHON: It is the case?

CHAIR: It is. You can address whatever questions you like. It is up to the minister.

Senator CORMANN: Mr Lamarre, are you aware that the last icebreaker for this country was built in Australia?

Mr Lamarre : I am aware of that.

Senator XENOPHON: In general terms, if it is a one-off ship but it is built off a plan, is that something that the ASC could work with?

Mr Lamarre : These are not decisions that I participate in.

Senator XENOPHON: No, I am just asking you.

Mr Lamarre : The government has made what appears to me to be a prudent choice, based on a number of considerations.

Senator XENOPHON: That is not the question.

Mr Lamarre : I understand that is not the question, but we are talking about hypotheticals now and I would caution—

Senator XENOPHON: No, no—

Mr Lamarre : I would just caution, please, that we have just made very significant announcements. That is a mountain of work for ASC. If we are heading down a path where we are considering, should be changing the contractual arrangements and giving the work to Adelaide, I would caution that I would then be biting off more than we could chew.

CHAIR: With that, Senator Xenophon, it is a hypothetical question that you pose, and I think Mr Lamarre has been very generous.

Senator CORMANN: He is actually not meant to answer.

CHAIR: And he should not.

Senator XENOPHON: It is not a hypothetical question.

CHAIR: If the minister wanted to be difficult, he would have instructed that, but Mr Lamarre was trying to be helpful.

Senator XENOPHON: Let's talk about something—

CHAIR: Specific and relative.

Senator XENOPHON: And relevant too.

CHAIR: And relative to the conversation.

Senator XENOPHON: Yes, always. Mr Lamarre, it seems I will not be able to get any more answers from you in respect of that. In terms of supply ships, the contracts have not yet been signed. Does the ASC have a capacity to be involved in the supply ships contract, if not for the hulls, but in relation to the fit-outs? Is there capacity, given that there is going to be a valley of jobs death that Senator Wong has drawn out, where there will be hundreds of jobs going between now and 2018?

Mr Lamarre : As my testimony last February, we have had some discussions with Navantia, which is the preferred tenderer, about some options and have communicated that to CASG as well. Again, it comes down to the procurement process, and—

Senator XENOPHON: Okay, but the short answer is: there is a capacity for ASC to have a significant involvement in the supply ships at this stage.

Mr Lamarre : As I said last time, I did not see a significant involvement at that time—I think I quoted something along the lines of 60,000 man hours.

Senator XENOPHON: Okay, but if there were infrastructure upgrades that the South Australian government could be involved in for instance, either ASC or Techport common user facility, would that increase the capacity for a greater involvement, should Navantia, as the preferred contractor, be able to provide extra work to the ASC?

Mr Lamarre : I would say that anything is possible, but it has to be carefully considered, given the recent announcements in all the work that we do have to progress forward.

Senator XENOPHON: You are still laying off hundreds of people.

Mr Lamarre : I have to caution that managing three lead ships in a shipyard at once that is only six years old is probably something that would need some very serious consideration before we would—

Senator XENOPHON: Okay, but there is a capacity there for some extra work.

Mr Lamarre : We clearly have capacity, if we are losing workers, yes.

Senator XENOPHON: Of course.

CHAIR: Thank you for your attendance, Mr Whiley and Mr Lamarre.