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Wednesday, 17 November 1993
Page: 3020


Senator REYNOLDS —I address my question to the Minister for Defence. Are the Australian Defence Industries now operating profitably? How is the company contributing to Australia's economic growth?


Senator ROBERT RAY —Mr President—


Senator Crichton-Browne —Tell us about the Bendigo Ordnance Factory.


Senator ROBERT RAY —Senator Crichton-Browne asks me to remind him about the ordnance factory in Bendigo, which he and one of his Western Australian colleagues—fortunately departed from this chamber—tried to close at the orders of his Prime Minister. It is now operating very profitably.


Senator Crichton-Browne —There was no order from the Prime Minister.


Senator ROBERT RAY —Sorry, there was no order; it was a conjunction of dull minds. The 1992-93 outcome for Australian Defence Industries is welcome. It is a clear demonstration of the rewards being reaped by decisions of government made in the late 1980s. It must be remembered that most of the activities carried out by ADI were previously done as part of Commonwealth departments, with an annual bill to the taxpayer of $250 million a year. When one looks at the figures announced recently, in that context they are particularly pleasing.  It is also an example of how management, staff and unions can work together to restructure an environment that was outdated and not suited to commercial-type practices. The change has been substantial. The areas that ADI was required to take on were difficult ones and not traditionally profit oriented.


Senator Hill —How much public money was involved?


Senator ROBERT RAY —Senator Hill interjects. When he asks his first defence question in this chamber as shadow minister I want everyone to be quiet so they can listen to him. But he has not done it since April this year. As shadow minister he has not asked one question on defence.

  The annual turnover for the company now is approaching $460 million. It is encouraging to see that ADI has reported an operating profit of $34.4 million in 1992-93. This continues on the good results in the previous years of $33.6 million in 1991-92 and $29.4 million in 1990-91, the first full year of business.

  ADI is now one of Australia's prominent defence firms. It has won contracts overseas as well as in Australia. It is a fully commercial operation, independently run by a board of directors. It has won contracts on its own merits and through its own hard work. The company is involved in a variety of defence products. ADI is part of a consortium bidding for the navy's coastal minehunter project. It produces sophisticated weapons targeting systems. It manufactures high quality, high tolerance equipment for the Collins class submarine.

  Earlier this year ADI and the Department of Defence signed a $1.4 billion ammunition contract covering the next 20 years. This will involve the construction of a $150 million ammunition plant at Benalla in Victoria. The new contract represents a substantial contribution to the nation's self-reliant defence posture at an affordable cost.

  There are also spin-offs into other areas that have proved profitable for the company. These include the construction of Western Australia's first wind farm and the refurbishing of the massive turbines at the Tumut power stations. ADI is achieving what the government hoped it would achieve. It has turned a non-profitable business with inflexible, old-fashioned practices into a profit-making enterprise. The board, management and staff at ADI are to be congratulated on their progress and success in recent years. The company is aware that the government will consider the future of ADI in the new year and whether it will be retained as a government-owned enterprise. I think the fact that ADI has shown that it is a viable defence company in Australia is encouraging.