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Thursday, 19 October 2017
Page: 8092

Senator GALLACHER (South Australia) (15:48): I present the third interim report of the Foreign Affairs, Defence and Trade References Committee on the impact of Defence training activities and facilities on rural and regional communities.

Ordered that the report be printed.

Senator GALLACHER: I move:

That the Senate take note of the report.

I rise as Chair of the Senate Foreign Affairs Defence and Trade References Committee to speak on the third interim report for the committee's inquiry into the impact of Defence training activities and facilities on rural and regional communities. The committee has decided to table interim reports after regional hearings so that local communities do not have to wait until the final report from the committee for the issues in their areas to be highlighted. This report covers public hearings in Darwin and Katherine in the Northern Territory.

Defence makes a significant contribution to the Northern Territory economy, with expenditure comprising 7.3 per cent of the gross Territory product—in 2015-16, $1.67 billion. The 2016 Defence white paper outlines further significant expenditure in the Northern Territory over the next decade, upgrading Defence facilities. In addition, there is the contribution of the US presence in the Northern Territory, which adds to the spend in the Northern Territory economy and community, and our government ministers have emphasised that the new investment in Defence will create jobs across regions and bring benefits to local businesses and communities. These policies and statements from the government have generated expectations that the regions will be able to benefit directly and indirectly through the participation of local businesses, particularly small to medium enterprises, in building Defence capability.

The focus of the committee has been to investigate whether regions, local communities and businesses have sufficient awareness of the effective access to information about plans to upgrade training facilities so that they can be in a good position to offer their goods and services. To this end, the committee held a hearing in Darwin on 22 August 2017, and, as I have already stated, Darwin has an extremely strong Defence presence. To the committee, the Northern Territory appears proactive and well positioned to take advantage of the opportunities from defence spending over the next decade. Defence NT sits within the Northern Territory government and works to coordinate the Northern Territory government's strategic engagement with Defence to provide opportunities and to increase industry engagement, business development and employment in the Northern Territory.

Defence NT has also appointed a Defence and National Security Advocate, who will be based in Canberra. Their role will be to position the Northern Territory to benefit from the expected $20 billion of defence construction projects planned for the Northern Territory over the next 20 years and to also maximise opportunities from other defence investments. So Defence NT is undertaking a range of actions to assist Northern Territory businesses to bid for more defence work and also, very importantly, to build capacity.

The committee heard from Master Builders Australia about the need to ensure that procurement policies and processes are aligned with the intention of providing opportunities for local small business. A key suggestion to open up opportunities for smaller businesses was around the size of the work packages. And the committee was extremely pleased to hear that, shortly after the Darwin hearing, the Minister for Defence announced that Defence will change the way of managing subcontractors in these processes. So Defence will trial smaller work packages for the upcoming Larrakeyah redevelopment and the Naval Operations in the North projects. Under this approach, buildings or work elements may be tendered separately. The minister has said it is expected that this initiative will provide greater opportunity to local industry in the Northern Territory. And the minister has also announced the local industry capability pilot, which is to ensure that local industry has the best possible opportunity to be involved in the government's defence investment over the next decade. There will be three pilot projects which will inform the development of the defence industry participation policy to be released in the first half of 2018.

The committee spoke with Indigenous businesses, which supported breaking up the size of the work packages, as most Indigenous businesses are relatively small. And the committee was encouraged to hear about people in the defence industry field approaching the Northern Territory Indigenous Business Network to form contacts.

The committee held a hearing in Katherine on 23 August 2017 at RAAF Base Tindal, a short drive out of the township of Katherine, and we undertook a site visit. Defence told the committee that the new air combat capability facilities at RAAF Base Tindal are providing opportunities, with 33 trade packages let to date, and 76 per cent have gone to local Northern Territory enterprises. The committee heard about the excellent working relationship that the Katherine Town Council has with RAAF Base Tindal and the regular meetings that occur. This is especially important given the PFAS issue currently in play in Katherine.

The committee was told about the good relationship with tier-1 contractors, who have held information sessions in the community, and there was acknowledgement about capacity issues and discussion about providing suitable training programs for businesses and the workforce so that they are ready to take up opportunities. Assistance is available for Indigenous businesses needing to meet a minimum standard to engage with, for example, Defence occupational health and safety requirements. The committee heard that the Commonwealth's Indigenous procurement policy has made a difference in getting tier 1 contractors to engage with Indigenous businesses.

The committee heard a positive story about the Bradshaw Field Training Area and the Indigenous land use agreement in place. However, the committee was disappointed to hear a less positive story about the Delamere weapons range Indigenous land use agreement. The committee has made a number of recommendations to the Senate, but, to summarise the work that we've done: we've tried to focus the Defence team that manages the expenditure to be very, very cognisant of the need to impact economically the area around the bases where this huge spend is going on. The township of Katherine has roughly 4,000 people. The Department of Defence is spending $750 million upgrading the Tindal capability to take the F-35 strike fighter. We would expect nothing less than a resounding story of success about the improvement in economic outcomes in the township of Katherine. Unfortunately, we didn't quite get that 100 per cent mark; we got indications of good work. We know that the ongoing long-term investment in the city of Darwin has meant there's slightly better awareness of capability and capacity, but we don't think it is where it should be. We think that there is still more room to move, that there is more growth to be had. If we can make sure that the regional economies alongside our major bases that these huge spends of taxpayers' dollars are benefiting, it will give Prime Minister Turnbull and his government even more benefit in terms of employment numbers, which today apparently appear to be quite positive.

I commend the report to the Senate and seek leave to continue my remarks.

Leave granted; debate adjourned.