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Wednesday, 16 August 2017
Page: 5814

Defence Procurement

Senator XENOPHON (South Australia) (14:27): My question is to Minister Payne, representing the Minister for Defence Industry, in relation to Australia's naval shipbuilding program. Can the minister confirm the future frigate program tender explicitly prevents the two sovereign and established Australian shipbuilders, ASC and Austal, from taking any management or supervisory role—in other words, acting as a prime contractor—for the Navy's $35 billion future frigate program? For this nationally significant defence project, is it the case that only a foreign company can take the lead and that it will be a foreign company that controls the program, a foreign company that will install its own management teams in Adelaide, a foreign company that will choose the workforce, a foreign company that will control the intellectual property and a foreign company that will determine the shipyard's strategic direction—for example, whether there'll be future exports to other countries?

Senator PAYNE (New South WalesMinister for Defence) (14:28): I thank Senator Xenophon for his question. Given that the future frigate program is currently the subject of an active tender process, the government and I will not comment on matters that might affect that process. And, on that matter, I do observe that it is at best most unfortunate that sensitive tender information has been released today through the media and, as I understand it, on Senator Xenophon's website. It does not help during an active tender process to do that. It undermines it and places the tender at risk of being delayed or worse. What I can confirm to Senator Xenophon is that what the government has set up is a process that will establish an Australian sovereign continuous naval shipbuilding capability, a capability that will provide what our Navy needs to keep our nation safe and secure, a capability that will secure thousands of jobs for decades to come, many of them—if not primarily the majority of them—in the state of South Australia, which Senator Xenophon represents, but also across the nation through supply chains and through supporting industry.

Our priority remains the acquisition of regionally superior, anti-submarine-warfare-optimised future frigates, along with the capability for sovereignty over their operation and sustainment. Intrinsic to that is the government's objective to maximise Australian industry involvement in the program without compromising on the capability, cost or schedule for the future frigates. This was a principal consideration in the decision to build in Adelaide, South Australia, noting that nationwide industrial involvement will be essential to the successful delivery of this major program. Everything the government has done since we made the decision to build the future frigates in Adelaide has been about creating a sovereign industrial base to deliver us the capability we need, along with the thousands of jobs that go with it. (Time expired)

The PRESIDENT: Senator Xenophon, a supplementary question.

Senator XENOPHON (South Australia) (14:30): I note that the document was an unclassified document. In a 20 June 2017 hearing of the Senate Economics References Committee's inquiry on the future of naval shipbuilding, it was revealed that Defence knew, and had known for some time, that ASC would have no substantive role in the Future Submarine program. We now hear that ASC will have no substantive role in the future frigate program. Noting that I actively sought the future frigate plan from Defence through FOI and was denied access on very dubious grounds, and it is an unanswered question on notice that is overdue, when is the government intending to inform the parliament of the shrinkage and possible shut-down of ASC?

Senator PAYNE (New South WalesMinister for Defence) (14:31): I am not going to again comment on an FOI decision that was made by the Department of Defence, and you should not and would not expect me to, Senator Xenophon. But I can very clearly assure the Senate that the future frigates will be built in Adelaide, with Australian workers and with Australian steel, and we will create a sovereign, continuous naval shipbuilding industry. The Adelaide shipbuilding workforce in Osborne is already undertaking vitally important work. They have built up extensive experience and skills in the build of the air warfare destroyer, and I congratulate each and every one of them on what they do and continue to do on the AWD program. They will be very keen indeed to know of our commitment to a continuous naval shipbuilding capability based in Adelaide—indeed, as the naval shipbuilding plan sets out, as the Defence white paper plan sets out, as the request for tender sets out, as our infrastructure upgrade shows, as our purchase of Techport shows and as our development of the naval shipbuilding shows: all in Adelaide. The evidence stands there. (Time expired)

The PRESIDENT: Senator Xenophon, a final supplementary question.

Senator XENOPHON (South Australia) (14:32): Does the minister acknowledge the demoralising effect that this completely unnecessary and strategically questionable news will have on the workforce of ASC, the impact it will have on the team spirit built up with the successful AWD program, and the impact it will have on workers as a result of their future employment uncertainty, in terms of their terms and conditions, as they contemplate working for a foreign company that takes away the control of the project from a local shipbuilder?

Senator PAYNE (New South WalesMinister for Defence) (14:32): The only person undermining the workforce in South Australia and undermining their confidence is you, Senator Xenophon. You are the one who is talking this down, nobody else—although Dougie and his mates would have a good go if they wanted to.

The PRESIDENT: Order, Minister. Two things: you must address senators by their correct title, and please address your remarks to me, not directly to Senator Xenophon.

Senator PAYNE: Senator Doug Cameron, Senator Kim Carr and you, Senator Xenophon, are the few people in Australia who are actually talking this proposition down—talking down a $90 billion spend in naval shipbuilding in this country to address the gap that those opposite created by doing nothing for the entire term of their time in government. Not one ship commissioned—not one! Zero. Nada. Everybody can understand that, even the Scotsman in the room—not one. This government will have a continuous naval shipbuilding industry supported by South Australian workers. Every single South Australian shipbuilder who has breath in their body will be part of this process—

The PRESIDENT: Order! A point of order, Senator Cameron?

Senator Cameron: I was pointed out by the minister: 'even the Scotsman in the room'. I'm an Australian!

The PRESIDENT: Order! There is no point of order, Senator Cameron.