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Monday, 9 September 2019
Page: 2188


Mr CONROY (Shortland) (17:24): I rise to speak to the motion from the member for Herbert, particularly the two last elements of this motion—that is, that the House supports opportunities to maximise the participation of Australian companies in all facets of defence procurement. And I applaud his valiant call for more employment of veterans.

The last point is that the motion acknowledge the government's commitment to deliver a robust, resilient and internationally competitive defence industry. While I've no doubt that the former is true, the latter is completely wrong. The government is clearly not committed to a robust and resilient defence industry in Australia, and this is demonstrated by its cuts to the defence capital budget, the inadequate levels of transparency around the defence budget and defence investment plans, and the declining effectiveness of Australian industry participation and capability measures.

Defence is currently undertaking a $200 billion investment program acquiring major new platforms across land, sea, air and key enabling capability streams. This investment should provide major opportunities for the Australian defence industry, but the opportunities are being diminished by major capital underspends on this government's watch. Following the release of the 2016 Defence white paper, the government budget papers estimated that Defence would spend $46.4 billion on its capital investment program over the four years from 2016-17. But analysis by the Australian Strategic Policy Institute has shown that every year since 2016-17 Defence has revised down these estimates and has ended up spending less than the revised estimates. The total shortfall in capital investment compared to the original estimates has been $5.17 billion over the four years from 2016-17 to 2019-20. This is a cut in anyone's language. Industry was counting on this $5 billion of capital spend that has gone missing.

To make matters worse, the government has not disclosed the reason for the spending cut. The reasons for more than $5 billion in underspending in this defence capital budget should not be a matter of guesswork for the Australian public or defence industry. The government is long on rhetoric when it comes to its defence investment plans but short on transparency. This example is symptomatic of a larger transparency problem with the Integrated Investment Program.

The IIP was released publicly in 2016 to facilitate a whole-of-capability and whole-of-life approach to capability acquisition and sustainment. It provided a guide to Defence's long-term capability acquisition plans, allocating, as I said, nearly $200 billion for investments over the decade to 2025-26. This is an important mechanism to ensure that Defence planners adopt a more integrated approach to investment. It is also a critically important mechanism to give Defence's partners in industry greater visibility of future capability demands, not to mention providing public accountability for the government's defence acquisition strategy. Yet compared to its predecessor, the Defence Capability Plan, the IIP provides minimal detail about its individual projects. In the three years since its release in 2016, there have been no public updates to reflect changes in the profile or time line for these planned investments. This is despite a commitment by the government to conduct annual reviews of the IIP in light of changes in strategic circumstances, capability priorities and developments in technology. It is despite the government's commitment to issue regular online updates to the IIP so that industry has access to current information about how Defence's investment plans are evolving.

We know projects have been cancelled because industry has told us. We know projects have been delayed because older capabilities are still in service. We know that the government has cut billions from planned capital investment in defence because the budget papers demonstrate this. There is now less ability for industry to understand Defence's investment plans than in the years before the adoption of the IIP. This matters for industry planning and it matters for public accountability. While there may be valid probity or commercial reasons for maintaining confidentiality for some changes in defence procurement plans, it is not acceptable for the government to refuse to provide any information at all on how the IIP is changing. This has negative impact on industry, especially small- and medium-sized enterprises. It means they no longer have enough information about Defence's investment plans to tool up and plan for future opportunities, and it is not consistent with the government's stated desire to work in partnership with industry.

This $5 billion of cuts to the defence budget and the lack of transparency around the government's changing strategic priorities for acquisitions demonstrates this government is far from committed to supporting the Australian defence industry.