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Tuesday, 4 October 1983
Page: 1262


Mr HOWE (Minister for Defence Support)(4.21) —I want to comment on some of the remarks of the right honourable member for New England (Mr Sinclair) and the honourable member for North Sydney (Mr Spender). Before doing so I say that since I have been the Minister for Defence Support I have had the opportunity to visit each of, I think, 13 establishments within the Department of Defence Support and probably twice that many establishments in the private sector as well as to take a brief trip overseas when I looked at defence industry in Scandinavia and the Netherlands. So I think I have some knowledge of the establishments in the Department and the private sector defence industry and some basis for comparison internationally. I would have to say that my first impression was extremely negative. I think it is clear that defence industry in this country, particularly in the public sector, has suffered considerable neglect over the post-war period-over a very long period. I think it is a rather surprising but, nevertheless, sad reflection on conservative governments in this country that they have not put the resources into defence industry which are so important an element in terms of national security.

I would refer to several remarks of the right honourable member for New England . He referred to the Utz Defence Review Committee. Let me say that I think the Utz Committee's report was extremely important and very useful. Indeed, I think the Department of Defence Support was a good idea in the sense that it did create a basis for the planning of defence industry in the country and management of establishments in a way that perhaps had not been possible under the many previous arrangements that existed. In terms of the recommendations that affect the Department of Defence Support I think the principal unfulfilled recommendations are those concerning the establishment of boards of management. That has been the subject of discussions with the Public Service Board, which seems to have some difficulties with the concept. I think it is a good idea. I hope that the boards of management will be established by the end of the year. But people will understand that they may need to be established progressively and we will certainly need to finalise agreement with the Public Service Board.

The right honourable member for New England expressed the hope that the FFG frigates will be constructed at the Williamstown Naval Dockyard. The Government has yet to make a decision on that matter. However, I would like to say that considerable progress-I think some credit has to be given to the previous Government-has been made at the Williamstown Naval Dockyard. We have recently appointed a new general manager and a new production manager. A number of senior management positions have been advertised which is very much in line, I think, with the recommendations of the first Hawke report. The industrial relations atmosphere at the dockyard has changed dramatically and in a very positive way. There has been something like a 90 per cent reduction in the number of industrial disputes in the last year. But if one looks at the trend over the past three years one sees that there has been a progressive improvement in industrial relations. We are placing considerable emphasis, as I think everybody would agree ought to be placed, on occupational safety and health. The Williamstown Naval Dockyard was the scene for an agreement between the Australian Council of Trade Unions and the Department in relation to occupational safety and health matters. I think that agreement provides useful procedures for the settlement of disputes and a framework for taking occupational safety and health matters out of the arena of industrial conflict. I think that is important.

A commercial accounting system-the honourable member for North Sydney will be delighted to hear me say this-is currently being introduced. We have private consultants assisting in terms of the installation of that accounting system. I believe the hardware will go in and that system will be fully operational by the time I make this report next year. I think that accounting system is extremely important not only to the dockyard. It is also important that we get a model. People have talked about commercial accounting systems in government establishments for a long time. I think very often the concept just has not been followed through and a proper model has not been established. We are very hopeful of Williamstown in that regard.

New improved material storage and handling systems are being introduced. There have been a lot of problems in the past in those areas. Industrial engineering studies are being carried out. I believe that productivity is progressively being improved. I think the Williamstown Naval Dockyard is being established as a very advanced facility which will add considerably to the country's defence industry capability. I think it is very often surprising that we do not recognise how good facilities can be in Australia. When the modernisation program at the Naval Dockyard is completed we will have one of the finest dockyards not only in Australia but also internationally.

The honourable member for North Sydney made a number of references to financial management. Such references were contained in recent reports of the Auditor- General. I do not think the honourable member for North Sydney could have been more appalled than I was to read those reports. I think it is quite unacceptable that we have accounting systems which do not operate on a commercial basis. I have no difficulty with that notion. I think we have to run our defence factories on what I would described as more commercial lines. Fundamental to that is the need for us to have proper accounting systems. Nevertheless, I suppose that is, in some respects, more of a reflection on previous governments than it could possibly be a reflection on this Government. We are determined that a proper accounting system will be established at the Williamstown Naval Dockyard and that all of the points made by the honourable member for North Sydney will be taken into account in terms of financial reporting in relation to the Williamstown Naval Dockyard.

I believe the Government Aircraft Factories warrant similar consideration. I am hopeful that we will make major progress this year to deal with the problems referred to in the Auditor-General's report in relation to the Government Aircraft Factories. I think it will be necessary to give priority to some establishments and I guess, in terms of guarantees, I am guaranteeing that at Williamstown and the Government Aircraft Factories we will see commercial accounting systems fully in place in the next 12 months. Accounting systems at other establishments are at various stages of progess and we will see what we can achieve within the next year. I think too little attention has been given to such accounting systems in relation to production. One of the things about the factories that strikes me is that they tend to place insufficient emphasis not simply on accounting as something that is important to the Parliament and the public in general but also, as an extremely important tool of management. If we are to develop corporate planning strategies for the production establishments as a whole and for particular establishments, proper commercial accounting is a fundamental tool that needs to be put in place. I will certainly be working towards that end.

The honourable member for North Sydney enunciated a number of principles which he felt ought to guide defence industry in policy and approaches. I might say that I have very little difficulty with most of the principles he espoused. I think self-reliance is an important objective of this Government. It is certainly important that we get more development. We spend a great deal of money in the research area in Australia and we have, in terms of the countries I have recently visited, probably a larger commitment of resources to research and more expertise. I think we can do a lot better on the development front and I fully agree with the honourable member's emphasis in that area. I think we certainly need a national and rational plan for the development of defence industry in Australia. I think we certainly need to be thinking in terms not merely of offsets and industry participation but also of co-production agreements with friendly nations. I think that is important and not merely in relation to our region.

My one point of reservation is that the honourable member for North Sydney was perhaps prematurely negative about the public sector. I think the fact that we have a defence industry of any standing in this country is due very largely to the fact that most of what was there in the Second World War happened to be in the public sector. I think the public sector has taken something of a mauling in the post-war period from successive governments. I have considerable confidence in the management of our various establishments and particularly in the people who work in them. I believe that given support, enthusiasm and opportunity, new programs in safety and health, better emphasis on training, a greater degree of industrial democracy, commercial accounting approaches and perhaps the introduction of a new emphasis on corporate management, those enterprises will compete with any private enterprises in this country. Of course, one has to recognise that a great deal of their capability is and always will be maintained strictly for defence purposes. That constraint will always be operating in terms of government establishments. I thank the right honourable member for New England and the honourable member for North Sydney for their contributions to this debate.