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Finance and Public Administration Legislation Committee
28/02/2017
Estimates
FINANCE PORTFOLIO
ASC Pty Ltd

ASC Pty Ltd

[09:03]

CHAIR: Officers are requested to keep opening statements brief or to seek to incorporate longer statements into Hansard. I welcome the Minister for Finance, Senator the Hon. Matthias Cormann; Ms Rosemary Huxtable, Secretary of the Department of Finance; Mr Stuart Whiley, interim Chief Executive Officer of ASC Pty Ltd; Mr Mark Lamarre, Chief Executive Officer, ASC Shipbuilding; and officers. Minister, do you wish to make an opening statement?

Senator Cormann: No, thank you.

CHAIR: Ms Huxtable, do you wish to make an opening statement?

Ms Huxtable : No, thank you.

CHAIR: Mr Whiley, do you wish to make an opening statement?

Mr Whiley : No, thank you.

CHAIR: Mr Lamarre, do you wish to make an opening statement?

Mr Lamarre : No, thank you.

Senator GALLACHER: Mr Lamarre, can we go to some questions and some evidence you gave? On 18 October 2016 you stated:

… we currently stand at a total of 1,772 for shipbuilding for employees, contractors and subcontractors …

Subsequently you said:

… we have 1,310 permanent employees and 462 contractors …

That was the evidence you gave on 18 October 2016, yet in response to questions on notice you stated as at 1 October 2015 you had 1,366 permanent and 457 contractors and subcontractors for a total of 1,823, then as at 1 October 2016 you had 1,195 permanent and 355 contractors and subcontractors for a total of 1,550, which is at variance with the evidence you gave before the committee.

Mr Lamarre : That is correct. I queried that this morning and was told by my staff that the apprentices were not in that 1,195 number, nor were what was one of our major subcontractors, who deal with blast and paint. So that is the difference in numbers. What I gave you in evidence was the full group.

Senator GALLACHER: So 1,772 is correct if you include a contractor you omitted and the apprentices.

Mr Lamarre : That is correct. That is what I have been advised this morning.

Senator GALLACHER: And the correct answer to the question on notice is they have actually gone to permanent and subcontractors, so they have excluded apprentices and this other contractor?

Mr Lamarre : Apprentices and one of our major subcontractors is what I was advised.

Senator GALLACHER: Who is the other contractor that was excluded?

Mr Lamarre : We have a blast and paint contractor on site that has more than 100 employees and fluctuates between 100 and 200 employees. The name escapes me at the moment.

Senator GALLACHER: They are on site, so they are there every day?

Mr Lamarre : They are there every day. They are in the contract to provide services for staging and blast and paint and are managed by our purchasing subcontract group. Transfield is the name of the company.

Senator GALLACHER: So, if we follow up with a question of what the current number of permanent employees, including apprentices, what have we got today?

Mr Lamarre : The answer would be 1,231.

Senator GALLACHER: That is including apprentices?

Mr Lamarre : That is right.

Senator GALLACHER: And what is the current number of contractors and subcontractors, including this—

Mr Lamarre : Three hundred and thirty-eight.

Senator GALLACHER: In relation to workforce planning, what is happening here? Are you planning to reduce apprentices or reduce contractors? Have you got work for everybody that is there? What does the current shape of things look like?

Mr Lamarre : As I have provided in evidence prior, the only work that we have under contract is the AWD program for shipbuilding, and so we will be on a steady decline certainly through 2017 and then until we can secure more work with the offshore patrol vessel contract.

Senator GALLACHER: To ask a question about apprentices: are you able to place them elsewhere? What are you going to do with your apprentice workforce?

Mr Lamarre : As routine, any time that we make a reduction in the workforce, the first thing that we do is work with our sister company in both South Australia and Western Australia to see if there are opportunities there. As a general rule, I would say that the apprentices would, depending on their performance on the job, be among our top employees and be the folks that we retain as we downsize as best as we can. So we will be distilling down, as I mentioned before, to our most experienced apprentices as well as the test and activation folks, for example, who operate our equipment for the ships. That is another example of the types of skills that we want to retain. Similar to apprentices, our test and activation employees have worked their way up through the ranks from the simplest work in their trade to the most complex, and so that would be a natural part of our strategy going forward.

Senator GALLACHER: How many are apprentices out of the 1,231 in total?

Mr Lamarre : I would have to get back with you.

Senator GALLACHER: Can someone supply that? No-one in the room knows the figure?

Senator Cormann: We have taken it on notice.

Senator GALLACHER: Thank you, Minister. You are in a good mood this morning. You forgot to tell us last time; I was just curious if anybody knew how many apprentices you actually had. What is the current status of the workforce planning in relation to apprentices, permanents and contractors? Do you have a schedule which says, 'Our work will run out and we'll need to reduce 10 here, 20 there'?

Mr Lamarre : As I have mentioned before, the job requirements fluctuate, depending on the demands of the program and depending on some of the decisions that are made with myself and the Alliance Partners with respect to how we want to treat schedule and what kind of potential challenges we want to place on the program.

Senator GALLACHER: I got all that. I know that the work is variable.

Mr Lamarre : Correct. With that, we have a pretty good view between now and the end of 2017 on what is going to happen with the workforce. There will be a reduction of approximately an additional 325 full-time employees.

Senator GALLACHER: Inclusive of apprentices?

Mr Lamarre : Some of them will be apprentices, very likely. I cannot tell you how many. That is possible. And probably there will be an additional 75 support subcontractors—so, somewhere in the range of an additional 400 between now and the end of the year.

Senator GALLACHER: So between March 2017 and December 2017 we will see probably another 400 job losses—325 permanents inclusive of apprentices, and 75 contractors.

Senator Cormann: Some contracts will come to an end because the paint job or whatever other contracted job comes to a conclusion. Obviously, contractors are brought on for task-specific functions, and you would not expect to keep a contractor in place once the contract has been performed.

Senator GALLACHER: So we get 400 job losses at ASC between now and December 2017.

Senator Cormann: We have gone through this before. This government is committed to the procurement of offshore patrol vessels, frigates and submarines. Your government, during the six years of the Rudd-Gillard period, did not order one single ship. The people of South Australia, in particular, and the employees of ASC would not be confronting the valley of death that they are confronting today if Labor had a different record in government. But we are working as fast as we can to bring new projects on stream as part of our naval shipbuilding plan, and the situation is better than it would be if Labor had continued not to order any additional ships or any submarines, which was your record in government.

Senator GALLACHER: Mr Lamarre, we know that there has been a loss of 130 positions. Has that all taken effect? On 6 January 2017 The Advertiser and The Australian reported that 130 trade positions would be lost by the end of February. Have those 130 positions been affected?

Mr Lamarre : Yes, they have.

Senator GALLACHER: Did they include apprentices?

Mr Lamarre : I cannot tell you if there were any apprentices on that list.

Senator GALLACHER: Perhaps you could take that on notice. How many of the 130 were achieved via forced redundancies or voluntary separations?

Mr Lamarre : I do not have the exact figures. We will have to get back to you with the specifics, but the number of 130 that was announced turned out to be fewer, because there were a number of other vacancies that we had in other trades in other parts of the program, and we were able to move people over and save those jobs. For example, 10 electricians who were working on the ship program went back to the submarine program, where they had originally started.

Senator GALLACHER: Excellent.

Mr Lamarre : It is typical, as we go through this six-week process of announcing what we always hope are the worst case job losses over a period of time, that we are able to place people in other jobs as best as possible. We also had—again, I do not have the specific figures—a significant amount of volunteer layoffs, if you will. That is another thing that we will do—ask for volunteers as we go through that process.

Senator GALLACHER: Perhaps if you could take on notice the break-up. It is pleasing to hear that people sought other opportunities within the organisation, but if we are relying on a report that says 130, it would be useful if you could tell us how many apprentices, who got work elsewhere and how many, if any, were forced.

Mr Lamarre : Okay.

Senator GALLACHER: If we add those 130 potential to the 400 projected, we are looking at 530-odd South Australians and their families who potentially would have, at the very least, to find other employment.

Senator Cormann: That is as a result—and I have to add this here again—of Labor over six years committing to zero vessels from Australian yards, and there is a lead-up time with ordering these sorts of vessels to ensure these procurements are managed professionally. What I would place on the record is that the coalition government, the Turnbull government, is committed to 54 vessels from Australian yards, including 12 submarines, 12 offshore patrol vessels, nine future frigates and 21 Pacific patrol boats. If it were not for the coalition—if we had performed as dismally as Labor did, committing to zero vessels over six years in government—the situation would be much worse. Now, of course, there is light at the end of the tunnel. There is opportunity on the horizon, and we are in a much better position, and certainly looking at a much brighter future, than we were under Labor.

Senator GALLACHER: Thank you, Minister. Mr Lamarre, if we could get the information on notice about the 130 that have gone. Do we have any time lines on the 400 that are projected, or is it simply that as work finishes there will be an adjustment in the workforce? Have we planned it out for a year?

Mr Lamarre : We have a view of how that will happen. Again, it is all subject to operational requirements, as I testified last time. We had a net increase in jobs, so we do have a notional plan and it all ramps down to roughly 400 employees by the end of the year, unless something changes again with respect to our strategy and how we go about prosecuting the work on these ships.

Senator GALLACHER: Mr Lamarre, are you responsible for the collective agreement that has expired and has not been renewed at this stage?

Mr Whiley : I am responsible for the collective agreement on the north and west sites. Mark is responsible for the collective agreement on the south site.

Senator GALLACHER: Can you bring us up to date? I did see some media reports about some action last week.

Mr Whiley : We had some stoppages on the north site, and there was some action taken by the south to support those stoppages.

Senator GALLACHER: What is the hold-up? Why can't we get an agreement in this area?

Mr Whiley : We are currently negotiating with our workforce to resolve this issue. Those negotiations are ongoing.

Senator GALLACHER: So, basically, you are operating in the private sector. Is there an impediment here? Has something been imposed upon you that it is making it difficult to conclude an agreement?

Mr Whiley : These are normal negotiations. I think the change this time around is that we are now covered by the APSC framework, and those requirements are part of the negotiation inside the enterprise bargaining arrangement.

Senator GALLACHER: I think all sides admit that there has been a demonstrated increase in efficiency and productivity, so that seems counterintuitive—if you have a government that has acknowledged the 40 per cent increase in productivity, why would you have a problem concluding an agreement? You do acknowledge there is a productivity improvement?

Mr Whiley : Definitely—the workforce has done a tremendous job turning around submarines, and certainly in the shipyard they are a world-class workforce. In submarines we are now exceeding all Coles benchmarks in terms of performance, so we are doing a great job from a workforce perspective.

Senator GALLACHER: And we cannot get an agreement concluded?

Mr Whiley : No.

Senator GALLACHER: What are the sticking points? Is it money? Is it conditions?

Mr Whiley : At the moment there are negotiations going on, and we are pursuing some actions. I do not really want to get into the details of those, because, as I said, they are in negotiation and I am hoping we get a positive outcome in the next few weeks on some of that negotiation.

Senator GALLACHER: Just so I understand it: there is an increase in productivity, there is a diminution in the workforce, the agreement has been expired for two years, and something is stopping the workforce and yourself getting together and securing your collective future. What is that? Are they asking for more money than you can pay?

Mr Whiley : No, they are not asking—

Senator GALLACHER: So, they are not asking for more than you can pay; they are accepting that there is attrition in the workforce; it has been expired for two years; and they have increased productivity to world-class standard—it seems a bit incongruous.

Mr Whiley : They are following their rights to negotiate a new agreement. We are negotiating that inside the APSC framework. We have—

Senator GALLACHER: I do not get that acronym. This is not my normal committee. What is that acronym you just used?

Mr Whiley : The Australian Public Service framework.

Senator GALLACHER: But these are not public servants, are they?

Mr Whiley : They are employees of a GBE. They are covered by the APSC agreement.

Senator GALLACHER: So all government business enterprises apply the Australian Public Service standard, do they?

Mr Whiley : As I believe, yes.

Senator GALLACHER: I will go to a couple of quick questions which contrast a little bit of what has been said. The minister may be keen to answer this. Do we have a new board member there? Is Ms Sophie Mirabella now on the board?

Senator Cormann: You must have looked at a press release from 2013. I can confirm that Ms Sophie Mirabella is not on the board. But one Gary Gray AO, the former Labor member for Brand, is on the board, I am pleased to inform Senator Gallacher, and I suggest you have a look at my press releases from 2016 rather than that from 2013—or maybe your staff doing the research for you and writing the questions for you should have a look at the 2016 press releases instead of 2013's.

Senator GALLACHER: Thanks for that. Just to be clear, my staff did not write the question.

Senator Bernardi interjecting

Senator GALLACHER: But my staff did not write it.

Senator Cormann: So you looked at the wrong press releases—that is fair enough.

Senator GALLACHER: I do not want my staff to be maligned.

Senator McALLISTER: Minister, when did she leave.

Senator Cormann: Ages ago. Well before the last election.

Senator Kitching: How recent was it? 'Ages ago' mean nothing.

Senator Cormann: It was certainly before the last election, I can assure you of that.

Senator KITCHING: I thought that her term expired on 12 December 2016.

Senator Cormann: Trust me, she was appointed in 2013. She was not appointed last year.

CHAIR: She was a candidate in the election, as you may know, Senator Kitching. She could not remain on the board.

Senator KITCHING: She is the defeated former Liberal member for Indi.

CHAIR: That is right—who ran at this latest election.

Senator Cormann: The proposition that Senator Gallacher put to me was that Sophie Mirabella was recently appointed to the ASC. For the record, that is wrong.

Senator GALLACHER: Yes, that is right.

Senator Cormann: She was, indeed, appointed in 2013, something that those who have been on this committee since then know we discussed at length at the time. But the person who was most recently appointed was an outstanding individual in the person of Gary Gray.

Senator KITCHING: Ms Mirabella was entitled to claim expenses as a director?

Mr Lamarre : I believe so. I would not be across this issue.

Senator Cormann: If you ask questions in relation to board matters, they are not questions that are appropriately directed to management. If you have questions in relation to board matters, you should address them to me, and I will take them on notice to assist you as best I can.

Senator KITCHING: Is a board member entitled to claim expenses?

Senator Cormann: I will take on notice what expenses board members on the ASC may or may not be able to claim.

Senator KITCHING: How much has she claimed to date?

Senator Cormann: I will take that on notice.

Senator KITCHING: Over what period was this amount claimed? To aid you, I understand her expenses were around $50,000—the breakdown is $20,000 on airfares, $20,000 on transport and $272 for luxury beachside accommodation in Cottesloe. How do these expense claims compare to other directors on the ASC board? I am happy for you to take those on notice and come back.

Senator Cormann: I will take those questions on notice. What I would say is that, obviously, is depends on where you live. If you live in Adelaide and you attend a board meeting in Adelaide, your travel expenses, self-evidently, are going to be less than if you live in Victoria or New South Wales—or Western Australia for that matter. This is a national organisation with a footprint in South Australia and in Western Australia in particular. It is, of course, important for that board to have its membership drawn from around the country, so you would expect a level of variation, as you would experience among members of parliament. For a senator from the great state of Western Australia, self-evidently and regrettably the expense to come to Canberra is higher than for Senator Zed Seselja or, indeed, for Senator Gallagher.

Senator KITCHING: Let us see how reasonable they are, and maybe a breakdown of the airfares would also be good to see where she was travelling to.

Senator Cormann: We will see how we can assist you.

Senator KITCHING: I have one final question to put on notice on this matter. Did Ms Mirabella miss any ASC board meetings since August 16 when she was appointed to the general manager of government and media relations at Hancock Prospecting? Just so you understand where I am going—

Senator Cormann: She was not on the board in that period. Whoever is doing your research is leading you up a garden path.

Senator BERNARDI: Chair, I have a question: it appears that Senator Kitching already has the information that she is now requiring.

Senator KITCHING: But I am seeking to confirm it.

Senator Cormann: The information that she has just read out is actually false.

Senator BERNARDI: Did you just make that up, Senator Kitching?

Senator Cormann: Do not assume that what Senator Kitching is reading into the record is accurate.

Senator BERNARDI: That is why I want to know if she just made it up. Did you make it up?

Senator KITCHING: No, they were questions on notice.

Senator Cormann: There are clearly some dirt diggers there somewhere who are giving her false information.

Senator BERNARDI: Senator Kitching, you have made some statements, and that is what I am trying to ascertain.

Senator KITCHING: I am in the Chair's hands.

Senator BERNARDI: You either have the information or you have just made that up and you are throwing it in there to be a bit spurious.

Senator KITCHING: No.

CHAIR: Thank you, senators, for all of your assistance there. It is much appreciated.

Senator XENOPHON: I would like to follow up on some of the questions that Senator Gallacher raised, and if they have already been traversed please stop me. I just want to go through that. You may want to take some of these on notice in that they are somewhat technical in nature. I want to get a breakdown from you from of the skill sets lost from the organisation through the job losses in the last 12 months. That would be useful. That is in terms of numbers, and we have an idea of the 1,231 employees and apprentices and the 338 subcontractors and contractors. Can you give me an idea of how long it takes to train and provide shipbuilding experience to each of those skill sets? You can perhaps give more details on notice, but as a general principle it is a pretty big exercise to train people up to have those skill sets, is it not?

Mr Lamarre : It is, of course. As we have been building an industry here in Australia since the opening of the shipyard in 2010, we have trained lots and lots of employees. Some of them came with experience. In the case of electricians, for example, all of the electricians we hired were licenced, so then we brought them on a journey of understanding the specific technical requirements of building a surface combatant. In other cases, we have folks who were boilermakers and welders and came from other trades. As is well known, in South Australia we have had other reductions in workforces, so we brought folks over. If we are starting from scratch, of course that takes years; if we are starting with employees who have prior experience—

Senator XENOPHON: You said it takes years in some cases.

Mr Lamarre : In some cases, of course.

Senator XENOPHON: So it costs tens of thousands of dollars to train somebody up, in effect.

Mr Lamarre : That is perfectly reasonable.

Senator XENOPHON: Right. What is the job forecast for ASC shipbuilding and what assumptions are you making in relation to those plans in terms of the number of OPVs, the start date for future frigates and your work share on submarines?

Mr Lamarre : I will leave the commentary on the submarines to Mr Whiley, but as I mentioned to Senator Gallacher I have a good view of what is going to happen this year with workforce reductions. In 2018, we have a less clear view of what is going to be going on, depending on the timing of the OPVs for example.

Senator XENOPHON: It is not just the timing of the OPVs; some OPVs will be built in South Australia and some will be built in Western Australia. Is that right?

Mr Lamarre : Yes, of course.

Senator XENOPHON: Do you know what the mix is at this stage?

Mr Lamarre : There have been public announcements that it will be two and 10.

Senator XENOPHON: So two in South Australia and 10—

Mr Lamarre : That is correct.

Senator XENOPHON: What are the start-up costs to build OPVs, in approximate terms?

Mr Lamarre : That would be impossible to articulate.

Senator XENOPHON: Would it run into the millions of dollars?

Mr Lamarre : Would it cost millions of dollars to set up a new program the size OPVs? Sure, that would cost millions of dollars.

Senator XENOPHON: I know you cannot comment on a policy decision, but that means if you are starting OPVs in one location and then starting them in another location a year or two later, that is going to cost money as well. That will presumably cost millions of dollars in start-up costs.

Mr Lamarre : My understanding of how CASG has been operating this procurement has been that they have taken a wider view of the costs associated with maintaining this industry and following through with a continuous shipbuilding program. I think those things would include the starting up of two purpose-built shipyards—one for minor warships and one for major warships—as well as trying to maintain skills so we can get the right outcomes in the Future Frigate Program, which is obviously a much larger program. If we can retain the skills for that program we would have a much better outcome.

Senator XENOPHON: I do not want to cut you short, but I have other questions to ask and I want to get through those as quickly as possible.

Senator Cormann: If I might just put a bracket in there, though, the reason for the two offshore patrol vessels to be built in Adelaide is because of the run-up time required to get to the building of the nine future frigates moving forward and various other things—submarines and so on. There is a run-up time there. In order to address to a degree as best we can the valley of death issues caused by the inaction of the Labor government for six years—that is why we have made the commitment. That is the reality of it.

Senator XENOPHON: Minister Cormann, do not poke the hornet's nest. There is the icebreaker. Whatever failings there were on the part of the previous government, the fact is that the decision was made to build the icebreaker—a $500 million icebreaker—in Romania. The decision was made in terms of the supply ships to build them almost entirely in Spain, rather than a hybrid build as recommended by the ASC in an unsolicited bid.

Senator Cormann: What I am just confirming for you again is the decision we have made to build the first two offshore patrol vessels in Adelaide from 2018 is in order to get an additional project into South Australia as soon as possible, bearing in mind the lead-up time for the start of the Future Frigates Program, which would take us to 2020. So that is in an effort to minimise the valley of death that was left behind by Labor. Labor decided on zero vessels to be built in Australia. Zero.

Senator XENOPHON: And when you were in government—

Senator Cormann: We have been in government since 2013, but the problem with these things is the run-up time and the lead-up time.

Senator XENOPHON: The supply ship contract was not set in stone, was it not?

Senator Cormann: That is not a procurement I am responsible for.

Senator XENOPHON: Then it is not safe for you to make an assertion. We could have had a significant Australian component for the supply ships. Indeed, the icebreaker could have been built in Australia rather than in Romania.

Senator Cormann: I disagree. What I am saying is obviously ASC is a Defence shipbuilder. Given the Labor government over six years made no decisions to purchase any naval ships—or submarines for that matter—we have made decisions. I think you were not here when I actually made the point that compared to zero ships committed to and zero vessels from Australian yards committed to over six years of Labor, the coalition has committed to 54 vessels from Australian yards, including 12 submarines, 12 offshore patrol vessels, nine future frigates and 21 Pacific patrol boats. In order to manage these projects professionally there is a run-up in terms of planning and design, et cetera, and the procurement itself, of course. That means the earliest we can start building offshore patrol vessels is 2018. In order to ensure there is further activity out of South Australia we have brought the first two offshore patrol vessels, and we have committed to building those in South Australia pending the finalisation of preparatory work for the Future Frigates Program, which cannot start until 2020. So we are working very hard to minimise the valley of death that was left behind by the previous Rudd and Gillard Labor governments.

Senator XENOPHON: You are building up ASC and Techport. If there had been a whole-of-government plan promised since 2015 by then-Minister Andrews, we could have been building those supply ships and that icebreaker in South Australia. That is the harsh reality.

Senator Cormann: The advice that I have got—we do not accept it—

Senator XENOPHON: You do not accept your advice or you do not accept what I have said?

Senator Cormann: I do not accept what you are saying.

Senator XENOPHON: I was not sure.

Senator Cormann: Australian build options in relation to supply ships were not able to achieve the required schedule to avoid a critical capability gap and a significant cost premium. A 40 per cent Australian hybrid build had a cost of over 40 per cent higher than what we were able to contract.

Senator XENOPHON: And there has been no analysis, Minister? I FOI-ed what analysis had been done in shifting the OPVs from South Australia to Western Australia, and there has been no analysis of the cost—

Senator Cormann: You are talking about something different now. The reason we are building the first two offshore patrol vessels is as a transition to the future frigates program starting. That is a different proposition from the supply ship question.

Senator XENOPHON: Perhaps I can cauterise the final questioning by asking Mr Lamarre: did the ASC make an unsolicited offer to the Commonwealth to have a hybrid build of the supply vessels or not, to effectively build three for the price of two?

Mr Lamarre : I believe we answered that question on notice last time.

Senator XENOPHON: I will refer to that. The answer was basically yes. I am not verballing you by saying that was the offer. When was that offer?

Mr Lamarre : We would have to refer to the question—

Senator XENOPHON: I will refer to that. That is fine. I want to race through a few other issues. Mr Whiley, can you provide me with details on which submarines are with ASC at the moment and broadly what activities they are undergoing. Is it full-cycle docking, intermediate-docking or remedial maintenance et cetera? Can you run through that very quickly.

Mr Whiley : At ASC North HMAS Collinsis going through a full-cycle docking. In Western Australia we have HMAS Sheeandoing a mid-cycle docking.

Senator XENOPHON: In terms of hitting your targets in respect of material ready days—

Mr Whiley : Currently we are performing at a forecast ratio of 107 per cent above—

Senator XENOPHON: So you are above the benchmark.

Mr Whiley : For the last four years we have averaged about 111 per cent.

Senator XENOPHON: That is very good. Has Defence indicated to you that Collins will come off the projects-of-concern list.

Mr Whiley : There has been no indication as yet, but we think it will come off.

Senator XENOPHON: I just want to go to the issue of power. Can you please provide me with an indication of the number of power outages that ASC has suffered over the last decade. Do you have any data—

Mr Whiley : We would have that data, but we would have to take that question on notice.

Senator XENOPHON: I presume you have critical systems on UPS—uninterrupted power supply—systems.

Mr Whiley : Yes.

Senator XENOPHON: Can you give me some more details in respect of that. Mr Pyne has announced a multimillion dollar power source for Techport. Up until now your company has not seen the need to install such a power supply. Is that right?

Mr Whiley : We are not in the business of generating power.

Senator XENOPHON: But increasingly a lot of businesses in South Australia are, whether they like it or not. It is not a criticism. When is that alternative power supply coming online; do you know?

Mr Whiley : I do not know anything about the alternative power supply that Mr Pyne referred to.

Senator XENOPHON: Minister Pyne also announced a new power supply at Techport on the recommendation of Defence, saying that SA power supply problems were putting at risk that major project employing 5,000 workers in South Australia alone. What impact would power supply interruptions have on the build? If you lost power for six, 12 or 18 hours, what would that do?

Mr Whiley : That is hypothetical. It is very hard to make any impact statements on that. Obviously it would depend on where, what time and what day. It is very difficult to make any judgement.

Senator XENOPHON: I will put some questions on notice about the air warfare destroyers. At the last estimates we discussed the need for the ASC to operate at arm's length and in particular the whole issue of press releases and your independence in how press releases go out. Has the situation now changed? Does the ASC operate with more independence? Do you still show press releases to the minister's office? Do you get them vetted, approved or consulted on with the minister's office?

Mr Whiley : I think the situation is the same as it was when we reported last time. We take input from various stakeholders before we release press releases.

Senator XENOPHON: Including the minister's office as a shareholder?

Mr Whiley : If appropriate, yes.

Senator XENOPHON: In terms of business development activity, ASC has a strong interest in the OPV program, the future frigates program and the future submarines program. Is that fair to say?

Mr Whiley : That is correct.

Senator XENOPHON: Is one of the entities that are competing for this share of the work Austal? Is that the case?

Mr Whiley : Yes.

Senator XENOPHON: That is not a criticism of Austal. It is a great company based in Western Australia.

Mr Lamarre : I would make one correction to that. The competitors in this space are the designers. So the RFT is out with the three designers that are pursuing the OPV. The designers are required to select an Australian shipyard to do the work in that meets certain criteria.

Senator XENOPHON: I do want to ask this question, though. Are you aware that one of the board members, Mr Jim McDowell of Austal, was appointed, according to ASPI's website, in December 2016 as government adviser for the Naval Shipbuilding Plan development. I am sure you will correct me if I am wrong, Minister, because you are very assiduous on these things. Is that your understanding? Do any of you have that understanding that Jim McDowell, a director of Austal, is a government adviser for the Naval Shipbuilding Plan development?

Senator Cormann: This is obviously not the portfolio to deal with the Naval Shipbuilding Plan. That is the defence portfolio.

Senator XENOPHON: I am relying on ASPI's website. It is a very reliable website, in my view.

Senator Cormann: Obviously, I am happy to take it on notice in an effort to assist you, but this is not a matter for this portfolio; it is a matter for the defence portfolio.

Senator XENOPHON: Okay. I can ask Defence. But can ASC tell me: has anyone at ASC been appointed as a government adviser for the Naval Shipbuilding Plan development?

Mr Whiley : No.

Senator Cormann: ASC is the government-owned shipbuilder. The government owns 100 per cent of ASC. Obviously, you do not appoint a business that you wholly own as providing separate advice.

Senator XENOPHON: This board member, Mr McDowell, is also on the very influential ASPI Council. Does ASC have any personnel on the ASPI Council?

Mr Whiley : No.

Senator XENOPHON: Would getting onto that very influential council be something you would consider?

Mr Whiley : We have not to date considered it. I would not know what the mechanism is. I have not been invited.

Senator XENOPHON: Maybe a letter to them would be a good start, given ASC's expertise in terms of naval shipbuilding. I will put some questions on notice on the Air Warfare Destroyer: I will leave it there, Chair.

CHAIR: If there are no further questions for ASC, I thank ASC and welcome officers from the Department of Finance.