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Monday, 4 May 1987
Page: 2542

Ms MAYER(9.10) —I listened with interest to the honourable member for McPherson (Mr White) who made some very sound and sensible points, and so he should given his experience. But I would like to remind him of just one or two things. One matter he mentioned that was not appropriate for the armed forces at the moment, or it was not a factor which encouraged people to stay there, was the rates of pay. It is true that in 1982 the armed forces had a wage freeze for a year. This was rather more than was suffered by the rest of the work force because, fortunately, the Government changed in 1983. The wage freeze was not a very good idea; it was not a very good thing to do. It pointed out very clearly that the previous Government allowed the rates of pay for the armed forces to be virtually at the whim of the Minister for Defence and open to all kinds of political and short term budgetary considerations rather than the sort of procedure which goes on now. Now a Defence Force advocate puts the case for Defence Force pay and the Defence Force Remuneration Tribunal meets regularly, and not when asked by the Minister, to determine pay and conditions for the armed forces. If the honourable member is of the belief that rates of pay and conditions have decreased under this Government, he needs to look at their history.

The subject in the White Paper I wish to address tonight is basically contained in chapter 6 which deals with defence industries. The policy information paper-the White Paper-provides in chapter 6 a very good discussion of defence industry policy which, for the first time in many years, gives Australian industry a chance to place its contribution to defence. The paper draws together the many strands of activities in the defence equipment area, firmly places defence effort in its proper context in industry and points the way ahead for industry participation.

The opportunities for industry can come from a number of possible areas. The first is the design, development and production of a unique Australian piece of equipment, and for that we might look at the over-the-horizon radar. It was designed in Australia, was developed here and is able to be produced here. It is uniquely Australian and uniquely suited to our particular geographic and defence needs.

The second way in which industry can participate is through joint design, development and production projects. There have been a number of those and there will be more in the future. The third way in which industry can participate is in the development for Australian needs of an existing design with local production. That basically is what the submarine project began as. Although the honourable member for McPherson expressed his uneasiness about using a design which has not gone through a full development phase, I remind him that when the FA18 was chosen it, too, was an unproven design. Given that it is flying in our Defence Force now and it will continue to do so for some years, that is not a very serious problem providing that people examine the project and that they know what they are doing. In the case of the submarine I suggest that they do.

The fourth way in which industry can contribute and which is described in this paper is by the production, under contract, of fully developed equipment. That is what we are doing with the FA18 parts. The fifth way in which industry can contribute is through the maintenance and replacement of parts for existing equipment. This is a very important contribution Australian industry can make, both to locally developed and produced equipment as well as that which is brought from overseas. The sixth way in which industry can contribute is through offset opportunities, particularly those offering the transfer of technology. Incidentally, none of these instances requires a specific defence factory working only on defence equipment. All of them offer opportunities for Australian industries to develop and to improve performance and export capability.

In the past industry association with defence has proceeded very much on a stop-go basis, making it extraordinarily difficult for industries to become associated with defence projects. Previous governments have set up factories, provided them with equipment to fulfil a finite contract and then left them to their own devices. Management of those factories was not set up in such a way as to allow them to operate on a commercial basis and they were prevented from making proper commercial use of taxpayer-provided facilities. So we ended up with some of the best equipped and most unprofitable enterprises in Australia, at enormous cost to the taxpayer and at enormous cost to the morale of the highly skilled people working there who from time to time found themselves with no work to do. Chapter 6.4 of the White Paper states:

While a substantial commercial work load can provide a base from which to bid for defence orders, the inverse is rarely true. The peacetime requirements of the ADF are usually too small and, particularly for the acquisition of new equipment, too infrequent and too limited in duration, to provide a viable long term base work load for individual firms or industry sectors.

That is an analysis which we have needed for a very long time and is one which this Government takes extremely seriously. Chapter 6.14 states:

It is the policy of this Government to encourage the widest possible cost-effective involvement of Australian industry in defence work. Such involvement in peacetime can establish the involvement and familiarity with defence requirements essential to timely escalation in contingencies.

Just to give an illustration of the difficulties that have been encountered, in a 1982 report on the Government Aircraft Factories, the Joint Committee of Public Accounts observed:

Under current arrangements, GAF lacks the autonomy and flexibility normally required by a large commercial undertaking.

The Committee stated:

Throughout this Inquiry we have touched upon a number of areas which, in our opinion have resulted in GAF being at a considerable disadvantage relative to its competitiors. It is the Committee's belief that an organisation such as GAF which has, by the nature of its role, to operate in a commercial environment, should have the same unrestricted flexibility and autonomy as has its competitors. Similarly, the Committee believes that the number of the accounting problems at GAF must reduce if it were subject to the same cash-flow/ profit making incentives as a private corporation.

Regarding the Department of Finance minute response to that report, the Committee stated:

The Government Aircraft Factories must move towards being more commercially viable while at the same time maintaining an identified commitment to Defence requirements for which an appropriate level of subsidisation should continue.

The Committee also recommended that the Government Aircraft Factories should become a statutory authority to give them some kind of chance of operating at high technical capacity and, with the very expensive equipment they have, operating on some sort of commercial basis. The Minister for Defence (Mr Beazley) decided against a statutory authority and chose instead to make GAF a commercial company wholly owned by the Government. In making this change the Government has recognised the need for stability in the skilled work force, proper accounting and financial management and management procedures and the need to make sensible use of specialist facilities in a way which avoids long periods of idleness. That is extremely important because nothing de-skills a skilled work force more than long periods of idleness.

Although defence needs cannot really provide for the substantial work load basis mentioned in the White Paper, it is true that many defence projects to which Australian industry can contribute are of a nature which brings leading edge-type technology to industry and which also demand high levels of management and quality control. In the past, and even now, some industries regard quality control of the necessary level as being a costly, time-consuming imposition on their operations instead of seeing what good quality control really brings-a cost effective way of ensuring higher productivity and greater reliability of products. It is depressing to hear of firms refusing to become involved in defence contracts because of quality control requirements. I direct the attention of those firms to chapter 6 of this policy information paper which described quite explicitly the benefits that involvement in providing for our defence forces can bring. The chapter provides a sensible answer to the problem of whether the nation should support factories dedicated specifically to the production of defence items or choose, through a number of means, to have a capacity in Australian industry generally to service the needs of our defence equipment policy.

The point made in this paper, quite properly, is that some items will continue to be procured overseas as design development and production costs will be insupportably large. That does not mean that Australian industry will be confined to assembly or low technology projects; rather, that self-reliance means, among other things, Australia's ability to participate in designing and supplying defence equipment, to develop new technologies, to increase work force skills, and to introduce new machinery. The industrial needs of our defence policy have the potential to add to our export capacities and to support improvement in our industrial performance. Nobody could argue that that is not very greatly needed. Changes and improvements made by this Government to the offsets program, giving emphasis to technology transfer and improving access to information and advice, have also provided significant opportunities for industry to upgrade profitable activities.

I would like to mention in the last few minutes some of the things which are going on at the moment to improve the situation of the personnel of the defence forces. I think I have made it plain previously in the House that I do not believe that the exemption of combat-related duties for women in the defence forces was really very much of a forward move, or was not even a standing still move. It seems to me to have been a backward move in many ways. I hope that in the future more common sense will prevail in that area. In the meantime it is very good to see that so many positions have been opened to women. I am particularly proud of the fact that we are training four women pilots this year, with more to come.

I would like to refer to the findings of the Hamilton report-the Review of Effect of Service Life on Spouses. It is all very well to talk with some pride about the personnel of our armed forces, to point to their technical capacity, which is very high; the level of their training, which is good; and the efficiency of their performance, which is outstanding. But if one looks at the conditions under which those people have worked for so many years, one gets a very different picture. One sergeant said to me: `It is not very good for your morale when you go home and find your wife crying every day because of the revolting state of the house in which she is living'. That has not happened in the last four years. It is a product of years and years of neglect, of not regarding housing as a priority for our defence personnel and of not considering the education needs of their children. (Quorum formed)

Mr DEPUTY SPEAKER (Mr Mildren) —Order! The honourable member's time has expired. I call the honourable member for Mayo.