Josh Wilson (Fremantle, Australian Labor Party) Share this | Hansard source

I am very glad to have this opportunity to speak on report 169 of the Joint Standing Committee on Treaties. It covers two agreements between Australia and France: an agreement that goes to the Future Submarine program and an agreement that covers classified information exchange, which is also related to the submarine program. These agreements facilitate and guide the further detailed arrangements in contracts that will follow regarding the Future Submarine project.

It is probably not necessary to say just how large in scope and scale, and how important, that project is. It is important strategically. It is important in terms of its potential for industry participation and capacity building, for jobs and skills in this country in sophisticated manufacturing and for marine and maritime industry. It is very complicated. The new submarine following the Collins class submarine will represent the most sophisticated manufacturing undertaking in this nation's history. It is also very costly.

The Future Submarine program will be the largest defence acquisition in our history. It is key to our regional maritime defence strategy as was set out in the 2016 Defence White Paper. It is the centrepiece of the Royal Australian Navy's continuous shipbuilding program. Labor members of the joint standing committee support the strategic value and the potential for industry capacity building that are inherent in this program, but we note that these things will only be delivered by the ongoing, close, stringent, careful and responsive supervision of all aspects of the Future Submarine program, or the FSP.

We recognise that defence strategy, procurement and operations fall within a special and distinctive sphere of policy and administration that occurs in the national interest. But we also recognise the importance of rigorous and discerning analysis and oversight of the FSP and other similar defence procurement projects. That analysis and oversight needs to be free of any tendency to regard such projects or such matters as being above ordinary review or criticism. Defence, in that regard, does occupy a special place in Australian governance and administration, but it cannot be so special that it is not subject to proper scrutiny and rigorous oversight.

Defence strategy, procurement and operations can never be matters that are so arcane and so rarefied as to prevent their full and proper supervision by parliament and government in relation to all relevant aspects of the national interest. Defence acquisitions, like the Future Submarines, should always be necessary, fit for purpose and cost-effective. I make the further point that the consideration of opportunity costs, when we look at defence procurement, should not be limited to foregone opportunities in defence alone. The defence budget is part of the national budget, and every dollar we spend somewhere is a dollar we cannot apply to another aspect of the needs of the Australian people.

In that sense, I want to make a side point. We heard from the Treasurer last night that the defence spending target of reaching two per cent of GDP is going to be achieved three years early, by 2021. That is fair enough. But it is also fair enough to ask what strategic need or imperative is driving that acceleration. That may well be a good thing, but we need to be able to ask in the parliament and in the public domain exactly what drives that acceleration, when of course there will be cuts and delays in other areas of funding.

The Treasurer said last night, 'The first duty of a national government is to keep Australians safe.' That is true, but there are a range of ways in which you can enhance peace, protection and stability. I have made the argument before that there is no better investment in peace and regional security, dollar for dollar, than targeted and well administered foreign assistance, and unfortunately we see a cut in that area. We do need to look at those two things at the same time, if we are serious about security and regional peace and stability.

The JSCOT hearings and the report process focused on a number of key issues in relation to the Future Submarine project. Two of the most important were control over intellectual property and the scope for Australian industry participation. Both of those things together go to ensuring our ability as a nation to maintain sovereign operational and sustainment capability. Australian industry participation should not be regarded as something that is important just in terms of the collateral economic benefits of this project. The benefits and advantages of administering a project like this well, such as jobs and skills and sophisticated manufacturing capacity, are very important, but that participation is actually critical to having the sovereign operational and sustainment capability that we want. We have to remember, when we consider something like a submarine, unlike other manufactured goods, things do not stop after the build. With other manufactured goods you might focus on the design and the build, but with something like a submarine, sustainment across its life is an enormous amount of work. The Collins class has a schedule of once-a-decade maintenance work that, more or less, takes 12 months, and there are other substantial periods when the submarines are out of the water and undergoing really extensive work.

Needless to say, the Future Submarine project is being looked at through the lens of the Collins class project in relation to both intellectual property and Australian industry participation. Many people would remember that, in the course of the Collins class project, there was a protracted dispute with the Swedish company Kockums. At one point, as Kockums asserted its intellectual property rights, Australia was prevented from having cracked propellers fixed. We had cracked propellers that were held in a ship off the coast of the United States and were not able to be seen to because of legal action. There were cases where Kockums employees had to be able to be aboard the Collins class submarines in order to undertake work while they were operational. These are things we would want to avoid through the Future Submarine project.

The point was made in the hearing that, when you talk about maximal Australian industry participation, it has got to be right through the process—in the design, the build and the sustainment. The Australian Manufacturing Workers' Union appeared before the committee and spoke about the importance of being involved in the design phase. They said:

… the multiplier effect of design work is much higher than for building work or maintenance work, and the opportunities for spin-offs and spill overs are much greater in the design phase that they are in other phases. … As we all acknowledge, we want the 12th submarine off the line to be better than the first submarine off the line. That is going to come out of having that concentrated design knowledge, know-how and 'know why,' combined with the feedback we are getting from the submariners who are on them …

Having that involvement is important from the point of view of operational management and that sovereign capacity.

We also heard evidence from Mike Deeks, who is managing director of Forgacs, a shipbuilder now based in my electorate, and also a former Royal Australian Navy Commodore and submariner. Mr Deeks gave us some insights into aspects that were poorly managed in the course of the Collins class project. He said:

The impact this had was poor operational availability and limited sea time and it had an adverse effect on recruiting, retention, training and morale. An ability to conduct underway repairs is equivalent to having more submarines in the force. If a submarine can remain on station operating independently of any shore based support, despite experiencing significant defects, it is like having additional submarines in the inventory.

The opposition members of the committee were glad, with the committee's support, to make some changes to the draft recommendations. The final recommendations included a request that the Department of Defence come back to the committee with further evidence as to how both intellectual property and maximal Australian industry participation will be guaranteed through the detailed contracts. I think that is a good thing and a mark of the committee's good work in this case.

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