Michael Danby (Melbourne Ports, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Hansard source

The most important factor about this treaty in the immediate term is an event that has just happened in France: Mr Macron has just been elected rather than Marine Le Pen—'Marine' being an ominous name for this very important defence procurement—whose constituency is in rural and regional France, including Normandy and Cherbourg, where many of these submarines will be built.

I endorse some of the cautions espoused by the member for Fremantle about report 169. This is Australia's largest strategic gambit and biggest Defence procurement ever. The Future Submarine program is, as I said, Australia's largest defence acquisition and it is key to our regional maritime strategy as outlined in the 2016 Defence white paper. Unfortunately, the boats will only be built after 2026—when the French have finished building the earlier version of them, the Barracuda class, for their own navy—and will only be in the water by 2032!

Labor, however, supports the strategic value and potential for industry capacity building that is inherent in this Future Submarine program. Our position is that it should deliver on these important values and have ongoing close, stringent and responsive supervision, as you would expect with a contract of $50 billion. It is not the first time our country has undertaken to build submarines locally, and it is not the first time Australia has been reliant on the intellectual property of another country.

Australia has many lessons to learn from the Collins class submarine issue, including the disputes over intellectual property that were mentioned by the member for Fremantle, that have the potential to diminish Australia's sovereign capacity to maintain and operate these submarines, which, after all, will not be deployed until 2050. Witnesses before our public inquiry noted that Australia continued to be reliant on Kockums personnel for onboard repairs to the Collins class submarines, which reduces operational availability and sea time. Of course, this would have to be something we try and avoid in future circumstances.

There have been many critics of this program, not least Mr Andrew Bolt. He has some serious criticisms of this agreement between the two countries which I am going to note later in my remarks without necessarily agreeing with all of his points. The French majority ownership of DCNS may not persist through the life of the agreement, which is expected to last several decades. Article 8(3) requires that France shall continue to ensure its obligations under the agreement are met in the event of a change in control of DCNS, but it is not clear how this would occur in some circumstances—for example, if DCNS was to be controlled by a third country entity.

The agreement cannot be considered a matter principally confined between Australia and France. The Future Submarines integrated combat system will be provided by Lockheed Martin. Witnesses before the inquiry made the point that appropriate trilateral arrangements will be necessary if the objectives of the agreement under consideration are to be achieved in areas like intellectual property, security of supply, security of information, sovereign capability and Australian industry participation. Achieving the objective of maximising Australian industry participation—article 3(1)(h)—will not be easy or straightforward.

We support recommendation 1 of the committee's report, which calls for the Department of Defence to report back in the 2018 winter sittings of parliament about the acquisition of necessary intellectual property and its ongoing maintenance. At the suggestion of Labor members, this report will also provide more detail in relation to the contractual and other arrangements that will secure maximal opportunities for Australian industry involvement.

Of course, submarines are built of steel. The French have a great deal of experience in building submarines. Steel is produced in Europe, and steel is produced here in Australia. Arguments for the fighting efficiency of this submarine may take the form of the French and European suppliers of steel arguing that only they produce steel that is hard enough and suitable for the submarine's hull at the great depths that we know submarines have to operate in. But, certainly, there is no reason why the steel for the interior of these submarines cannot be provided by Australia. I see that Adani is offering to build all of its railways with Australian steel. I am sure the contractors for this would have considered the same.

Labor members of the committee strongly supported recommendation 2, and we are grateful that the government members did as well. Recommendation 2 says:

… the Committee recommends the Government seeks to ensure that the further detailed agreements and arrangements have the effect of allowing Australian companies to bid for work in all phases—

of the treaty—

on a preferred basis, all … things being equal.

I think that is a very important thing. It ensures not only that Australians can bid on it but also, all things being equal, that Australian companies will be considered on a preferred basis.

Of course, there are people who think it is a very big gamble to spend so much money over such an extended period of time on such an important strategic asset with a country so far away. We have really good relations with France. I personally know very well the French Ambassador to Australia, Stephane Romatet, who was chief of staff to Prime Minister Manuel Valls. I see him, speak to him and correspond with him regularly. I hope Mr Valls takes a leading role in the Macron government.

But France does have its own foreign policy. Recently, France quite commendably decided to cancel supplying the two aircraft carriers that it had sold to the Russians. This was probably a good thing given that Mr Putin unilaterally invaded Crimea and seized part of Ukraine despite the fact that the international community, including Russia, had agreed to guarantee Ukraine's sovereignty in return for Ukraine giving up nuclear weapons. Giving up nuclear weapons is something that no other country has ever done. You can imagine that many Ukrainians think the Russians would not have been so bold if Ukraine still had nuclear weapons. It is probably a factor encouraging Kim Jong-un and the Iranians to acquire nuclear weapons.

My point is that, whether we agree with the French policy of strategic shift or not, there is a concern about this. Mr Bolt, for instance, says that not building at least the first few submarines in France will mean the company 'delivers submarines to the Royal Australian Navy more slowly and at a higher overall cost'. Moreover, Bolt argues that this project 'will not deliver the last submarine for at least 35 years, and we do not even know whether we will need such technology then; and that, perhaps more dangerously, it gives a historically unreliable ally and supplier the power to model one of our major armaments if we fight in a war it does not like'. Now that appears far-fetched; I would even say it is anti-French. It is a view I do not share. But I am not the Oracle of Delphi—I cannot see 50 years into the future.

And Mr Bolt has a point. This is why we are going to have to supervise this arrangement with France very carefully, continuously. All members of this parliament—even those who are not concerned with Defence procurement and strategic issues—should concern themselves with this because, as the member for Fremantle said, it means we are going to spend $50 billion of Australian taxpayers' money on this and not on other things, including other Defence procurement. I know that the member for Solomon has very strong and very wise views on Defence procurement. We all, as an opposition, support the government on this general attitude towards the important acquisition of strategic defence for Australia—the submarines—but we have to be very, very mindful of how it operates over the next few decades.

Debate adjourned.

Sitting s uspended from 12:43 to 16:01

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