Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Defence) Share this | Hansard source

I will pick up on the interjection and anticipate the minister’s response. They signed the contract on the Seasprite. I can anticipate him saying, ‘It was originally a Labor idea.’ True, the original concept was a Labor idea—but not the idea of pushing beyond the capabilities of the copter or the management of the project over the last 11 years. A billion dollars has been spent. If the minister decides to flush that $1 billion down the plughole—which is widely rumoured to be a fair chance—then he will have to spend at least another $1.5 billion on a new helicopter. In addition to that, we all read the recent letter from the contractor, Kaman. He will probably be facing compensation payments to the primary contractor.

I do not know whether the minister is going to scrap the Seasprite and sell it for scrap or not. Maybe we will get an answer from him today. He might surprise us. But what I do know is that whatever decision he takes, the taxpayer and national security, vis-a-vis our defence capability, will be the losers. His choices are: flush a billion dollars down the drain, spend another $1.5 billion and face compensation payments, or invest what is rumoured to be about another $60 million in the Seasprite project in the hope that within the next 25 months the Seasprite will be in the air doing the job it has been contracted to do. Neither choice is a particularly attractive one. We concede that. But this is a problem of the government’s own making. I suspect that most taxpayers would think that another $60 million and a fair chance of the aircraft becoming operational is probably a better choice than throwing $1 billion away and spending another $1.5 billion. I do think most taxpayers would think that is a better option, particularly if it means delivering the project in 2010—which is not likely to be the case if the minister goes shopping elsewhere. I have seen the Seasprite helicopters, brand new and shiny, in their hangar down in Nowra. I have sat in the Seasprite helicopter. It is an impressive-looking aircraft. The thought of that aircraft being used for scrap after so much public money has been invested in that project would make any taxpayer cry. So I challenge the minister to clarify that point today.

Let me go through a few of the other projects: the airborne early warning and control aircraft, late and over budget; the new air defence command and control system, late and over budget; the FA18 upgrade, late and over budget; the FFG frigate upgrade, late and over budget; the M113 armoured personnel carrier, late and over budget; the Joint Strike Fighter project, late already and already over budget. Now we are told that the air warfare destroyer project—not even at second pass—is already over budget. I could mention more. There are more on the list, I can guarantee the House, but I have got 15 minutes and I am not going to waste it going through them all.

The defence budget is in crisis. You do not have to believe me; ask the experts. Read Des Ball, Hugh White and others who have been saying the same. A huge gap is opening up between funding and spend. The Super Hornet project alone puts the budget $6 billion overspent. I calculate the total capital cost of late or stalled projects is now around $14 billion. We spend $20 billion on defence, and this minister has overrun the budget by some $14 billion in capital terms. What he has not done, as has been so adequately pointed out by Mark Thomson from ASPI, is to take into account the recurrent costs of operating all these projects that are now over budget and running late.

It only gets worse. The Defence Materiel Organisation has conceded that around 30 per cent of its current projects are delayed. And of course delays equal greater costs. The high tempo of the ADF is likely to continue for some time to come, particularly given the government’s determination to stay the course in Iraq; our commitments in Afghanistan and in our own region, with a developing arc of instability; and of course we do expect the changing balance in the broader region, including all of Asia, to continue to evolve over the next few years. All these things will continue to impose additional costs on the defence budget.

Increasingly, wealthy nations in the Asian region, including South-East Asia, are gaining access to off-the-shelf, high-tech assets like submarines and aircraft—areas where we have enjoyed superiority for a long time, but it is a superiority which is closing very quickly. This has been pointed out by ASPI, particularly the difficulties we face with respect to antisubmarine warfare capability.

The minister is pretty predictable; in fact, the government is pretty predictable on the political fixes. In this election year—make no mistake about it—they will spend up big in the May budget. They will spend billions extra in the May budget. They have been crying already about three per cent real growth, but the problem is that the waste is probably taking that into reverse. We have not got three per cent real growth when money is being thrown out the window on a daily basis, but they will spend up. The problem is that, while we understand and know that they have the capacity to spend up big in this budget in the middle of a resources boom, that will not continue, and when you make commitments like this they are ongoing. When you make a decision on an asset purchase, it is a 30-year commitment. During budget time, the minister needs to explain how he is going to make that sort of spending sustainable given the waste and mismanagement that we have seen in recent years.

Today is the opportunity for him to answer some of those questions and to explain to the parliament why I am wrong to accuse them of undermining Australia’s national security by their hopeless approach to the management of our procurement programs and their hopeless waste and mismanagement. (Time expired)

See this speech in context