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Wednesday, 19 April 1972
Page: 1225

Senator DRAKE-BROCKMAN (Western Australia) (Minister for Air) - Senator Bishop, in opening for the Opposition, referred to the Australian Labor Party's concern for what he speaks of as the general uncertainty about the future of the Australian aircraft industry. He went on to speak of the fears of his Party and those who work in the industry of further retrenchments. He asked why "we are importing huge quantities of what he calls 'pieces of equipment'. Let me say straightaway to Senator Bishop and to all those listening that it is the expressed intention of the Commonwealth Government that a viable and effective defence aircraft industry should be maintained in Australia and that the industry should develop with the country's needs.

What are the needs of the country? Let me say immediately that over the years we have purchased about 1,300 aircraft. Of that total we have made about 1,000 aircraft locally. In addition we have endeavoured to give the industry orders for pieces of equipment - to use Senator Bishop's term - and only recently an Australian manufacturer was awarded a contract against overseas and Australian competition for 100 automatic direction finding systems for the Macchi trainer. Up to that stage there had been very little development in Australia in the area of what might be called advanced military avionics. The placement of this order undoubtedly will stimulate this type of manufacture in Australia. This must be the result. The factories producing this piece of equipment will have something which has not been produced before and the expertise of the workmen involved on the contract must be improved.

I think the Opposition's suggestion that the Government has failed to safeguard the Australian aircraft industry is invalid. Let us have a look at the situation. We have 3 major contractors in this country, namely, the Government Aircraft Factories, the Commonwealth Aircraft Corporation and Hawker De Havilland Australia Pty Ltd. Along with other lesser contractors, these factories employ about 7,000 men. I believe that the industry is one of the more important employers of labour in Australia. When we look at the factories individually wc see that the 3 main ones employ the following numbers of staff: The Government Aircraft Factories about 1,990 men; the Commonwealth Aircraft Corporation, I understand, about 1,950; and Hawker De Havilland, I believe, about 1,700 employees. This means that the balance of 1,360 men are employed in the other 5 factories.

Senator Bishopspoke of retrenchments. One regrets that retrenchments do occur, but the honourable senator knows as well as I do that the industry is characterised by ups and downs in employment. These ups and downs are in a way unavoidable because the industry is dependent .on work load levels which in turn are dependent on defence orders. Recently we had the situation where the Government, through its policy of continually endeavouring to stabilise the work load in the industry, directed certain defence projects. However, I will deal with them a little later. Senator Bishop went on to refer to some of the retrenchments of more recent times. From information supplied to mc I find that 10 mechanical tradesmen and 6 electrical tradesmen were issued with retrenchment notices as late as 7th April of this year. Retrenchment notices were issued also to 6 electrical tradesmen at the Fishermen's Bend plant, but a review of the situation enabled those latter notices to be withdrawn. This review also brought to light the fact that the management could offer employment at Fishermen's Bend to 8 of the 10 mechanical tradesmen under notice of retrenchment at Avalon. Four of these personnel have accepted the positions offered to them. The fifth was found upon interview to be unsuitable for the work available and the remaining 3 men declined the offer. Endeavours are being made to overcome this problem. We recognise the problem but, as I said, it is dependent on the work load and the work load is dependent, in the main, upon the demand.

Let us look at the importance of this industry and its magnitude. In this financial year, 1971-72, the value of the work load for the industry for the 3 main organisations which I have mentioned exceeded $40m. The Opposition's doubts about the future of the industry are not reflected in the confidence held by the Government and by the industry in respect of works capitalisation. When we look at this situation we must remember, for example, that the value of Commonwealth owned land, buildings, services and plant used in this industry amounts to about $24m while privately owned investment in the same categories totals a further $16m. This amounts to a total capital investment in the industry of well over $40m. I would describe the aircraft industry as a growth industry. But it is important to understand that recognition must be given to the fact that by its nature, as I said before, it is subject to troughs and peaks. Obviously, in time of war and during periods of reequipment by the Services the industry booms. Then, in the intervening period, the industry slackens. So we have a situation in which some men have to be stood down.

The industry is going through one of these troughs and this is why the Government is doing everything possible to try to obtain offset orders. We had a situation in which 110 Mirage aircraft were built under the Mirage programme. We also had the Macchi programme. The Mirage programme has been completed and the Macchi programme is drawing to an end. So the work load of those 2 programmes has dropped off considerably. However, these aircraft that 1 have mentioned will be replaced and other aircraft have to be introduced into the industry. Earlier this week Senator .Bishop asked me about the replacement of the Mirage aircraft and the Winjeel aircraft. I said in reply at that time that the Air Staff Requirement had been issued to the interested companies stating the requirements of the Royal Australian Air Force for the Mirage replacement. I indicated that up to date we had received proposals from 3 companies, one of which was the SAAB company which manufacturers the Viggen aircraft about which the honourable senator spoke. That company has already put proposals before the Department of Air. I expect a further 3 or 4 proposals to be put to the Department.

The Department of Air must carry out an evaluation of each of these aircraft in regard to its performance and to see whether it meets the requirements of the RAAF and Australian conditions. Above all, proposals must contain offset orders for Australian manufacturers. A study of this will take some time. As I pointed out, although we called for the Air Staff Requirement some time ago we have only 3 firm proposals before us. We are waiting for more. In the case of the replacement for the Winjeel aircraft, we have received a number of firm proposals. The list is now reduced to 3 or 4 proposals which must be evaluated on the basis of their meeting RAAF requirements and the Government's requirement that they shall contain a fair percentage of offset orders.

This is the sort of position that we face at the present time. Recently, we had the announcement to which 1 think Senator Bishop referred. That was in respect of the placement of offset orders in Australia not only for Service aircraft but also for the purchase, assembly, maintenance and manufacture of parts for civilian aircraft. The Minister for Defence (Mr Fairbairn), in conjunction with the Minister for Trade and Industry (Mr Anthony) and the Minister for Supply (Mr Garland), on 14th April announced that an agreement had been reached with the Boeing company for offset manufacture in Australia of nearly $3m worth of spare parts for Boeing 727 civil airliners. This agreement provides for the manufacture locally of rudders, elevators and inspar ribs by Hawker De Havilland Australia Pty Ltd and the Government Aircraft Factories. These new contracts bring the total value of offset work being undertaken in Australia for the Boeing company to approximately $7m. Perhaps the Opposition will say that it is not enough. But it is vital work that we are able to obtain at this time during this trough period.

The contracts previously signed with these companies and with the Commonwealth Aircraft Corporation include not only those components which I have mentioned for the Boeing 727 aircraft but also windows, flap gear boxes for the Boeing 747 aircraft and various machined parts for both the Boeing 727 and 747 aircraft. It is worthy of mention that Australia is now the sole source of supply for rudders, elevators and inspar ribs for the Boeing 727 aircraft. If we can build on this sort of policy I believe we will have some future in the aircraft industry. I believe this is a very commendable effort and it speaks highly not only of the Government's policy but also of the competence and the capacity of the local industry. As I -indicated previously, it is the stated policy of the Government to maintain a small but viable and effective aircraft industry in Australia. The Government and my Department, together with the RAAF, give heavy support to this industry because they recognise that aircraft production and, indeed, all Australian industry must in times of emergency provide many weapons, ammunition, equipment and supplies needed to sustain the defence of this country. Two benefits flow from RAAF support of the rapidly growing and highly skilled industrial complex in this country. Firstly, without an efficient local industry there would be no capacity to develop sophisticated weapons and equipment, nor would we have highly skilled experts to assist in the maintenance of this equipment. I think that it is axiomatic that a strong industry is vitally necessary for the defence of Australia. But it cannot remain strong unless it receives the constant stimulus of defence orders. This is where the catch is.

If honourable senators look at past and present policy they will find that on every occasion since World War II when aircraft have been required in sufficient numbers to justify tooling up in Australia the local industry has been allotted the task of manufacturing those aircraft. It is well to recall to the Senate the aircraft and the aeroengines that have been manufactured in the past in Australia under licence. These include the Canberra bombers, the Sabre fighters, the Vampire fighters, the Vampire trainers, the Mirage fighters, the Mirage trainers and the Macchi trainer programme that is just being completed.

Looking at the engine situation, we find that Australia has manufactured the Nene, the Avon, the A tar and Viper engines. In addition, attention must be drawn to the fact that Australian designed projects allotted to the industry include a number of other projects. I speak of the Jindivik pilotless target aircraft, the Winjeel trainers, the Malkara anti-tank weapon and the Ikara anti-submarine weapon. I would be remiss, I believe, if 1 did not say that a great deal of effort has gone into developing new projects to provide a workload for the industry.

Let us examine some of these projects of which I speak. We have the light observation helicopter. The military requirement for these aircraft is 75, spread over a long period. Such a programme would not have permitted long production on an effective basis because the programme had to be drawn out over a long period. But, in an effort to achieve an acceptable programme for the local industry, tenders were called on the basis that 116 civilian aircraft would be manufactured at the same time in Australia.

I turn to the Ikara missile. Approval has been given to an effort to achieve overseas sales for the Ikara anti-submarine weapons system. An announcement was made only recently that, as a result of these efforts, the Ikara missile has been purchased by Brazil and orders worth approximately $20m to local industry are now in hand or are expected. This surely is a highly commendable effort that reflects the worth of our aircraft industry.

Again, there is the project Turana. The Turana is a small target drone based on the Ikara system and has been adopted by the Royal Australian Navy. After successful research and development by local industry, the first small production run of Turana is about to be commenced. There has been considerable interest overseas in Turana and its prospects in that direction I understand are regarded as promising.

Finally, but by no means least, I would examine the Project N development. Project N is the current title given to a design project undertaken by the industry for a light multi-purpose fixed-wing aircraft with high short take-off and landing characteristics. The Government has approved an expenditure of over $4m on the design stage which involves manufacture of 2 flying prototypes, a test airframe and certain other work. Both prototypes have achieved all design expectations and the performance of the aircraft has attracted a great deal of interest. Senator Bishop made the point that I had inspected and sat in the aircraft. On returning to the Senate after that inspection, ] was asked a question about Project N. 1 expressed great in I west in it and said that because of its characteristics I believed it had a future in civil use in Australia. Its characteristics are most adaptable to conditions in this country. Whether or not the production

Stage of the aircraft should be recommended for approval is now under examination in the defence group of departments and can be expected to be considered by Ministers in the near future. The project has provided valuable work for the design team in the Government Aircraft Factories at Fishermen's Bend.

In discussing the Australian aircraft industry it should be noted that a very important source of potential workload for the industry is reciprocal purchasing agreements. The Government has made it known to the overseas aerospace industries receiving orders for Australia's military and civil requirements that reciprocal purchasing opportunities are expected. I can tell the Senate that participation by overseas firms in this programme is increasing. Special machinery has been set up by the Government to facilitate participation in these opportunities. This includes an inter-departmental committee, consisting of the Department of Trade and Industry, the Department of Defence and the Department of Supply, and a committee of industry experts. To date, as I mentioned, orders worth $7m have been won. The work is highly competitive and, although only mildly successful to date, the programme is proving to be of particular value to the industry because of its challenge lo management skills and new manufacturing techniques involved.

A current trend of some significance to the Australian aircraft industry is that towards collaborative programmes between two or more countries requiring an aircraft of particular performance. This trend could bc said to be generated by the ever increasing sophistication of aircraft accompanied by extremely high design and development costs. It is regarded as important that opportunities should be developed for the local industry to participate in such programmes. If the industry has a problem, it is securing workloads suitable to its capacities and skills. The industry, of course, is heavily dependent on defence orders for its workload. For example, in the 1970-71 financial year, the RAAF spent 74 per cent of its budget of $303m in Australia and the remaining 26 per cent overseas, including expenditure for the maintenance of squadrons and units in Malaysia and Vietnam. Of the money spent overseas, 75 per cent was for aircraft equipment and stores. For the first quarter of the current financial year the percentage of local expenditure is slightly higher. To the end of September 1971, the respective percentages were 77 per cent in Australia and 23 per cent overseas.

The extent to which contractural payments fall due early in the year has some affect at this juncture. In Australia, major contractors and suppliers to the RAAF total almost 200, while suppliers on a small scale run into hundreds more. I would mention also that, to ensure that the maximum number of orders is placed locally, the procurement of products from overseas is constantly reviewed. If the Service has been forced to order a product overseas because of unavailability in Australia, the next lime it has to be purchased reference is again made to local industry. If the product has since been developed and manufactured locally, then local industry is given every consideration. The RAAF provides a workload for the Australian aircraft industry because of its requirement for support from the industry in 2 major areas, namely, engineering and maintenance. On maintenance, service and engineering support the RAAF alone has spent $1 1.5m this year in the aircraft industry. I should explain that the engineering support includes the design and development of aircraft repair schemes, the design, development and manufacture of modifications, the manufacture of spare parts and the provision of technical services. The latter includes the provision and maintenance of drawings and technical data, investigations of defects and advice and assistance on many aircraft engineering subjects.

The annual cost of these technical services is in excess of $l.lm. Maintenance includes servicing, repair, overhaul and incorporation of modifications to airframes, engines and aeronautical equipment, which embraces airframe accessories, engine accessories, instruments, electrical, radio, electronic and armament equipment and weapons systems. Maintenance work at depot level allotted to industry represents the following proportions of the RAAF depot level arisings: Airframes, 50 per cent; aircraft accessories, 81 per cent; ground telecommunication equipment, 78 per cent; and ground support equipment, 68 per cent. At present, all aircraft engines are allotted to industry for major repair and overhaul. It is intended to overhaul the Pratt and Whitney TF-30 engines of the Fi 1 1 aircraft within our own service, but even then the proportion of engines allotted to industry will exceed 95 per cent.

With a view to achieving a more effective industry, consideration is being given to the possibility of rationalising the facilities of the Government Aircraft Factories and the Commonwealth Aircraft Corporation Pty Ltd which operate alongside each other at Fishermen's Bend. A joint Department of Supply and CAC report on the possibility of merging the 2 organisations was received by the Minister for Supply and the Board of CAC in late February. Senator Bishop has referred to it. That report is now receiving interdepartmental consideration. The report has given rise to a wider study of the possible alternatives for the aircraft industry as a whole, such as embracing the Sydney segment operated by Hawker De Havilland Australia Pty Ltd at Bankstown and Lidcombe. There is no doubt that rationalisation of the industry overall is necessary if it is to be placed on an effective basis. An important source of the potential workload for the local industry is overseas aerospace organisations through reciprocal purchasing opportunities and collaborative programmes. As announced by the Minister for Supply on 4th April-

The ACTING DEPUTY PRESIDENT (Senator Cant) - Order! The Minister's time has expired.

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