Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That this House:

(1) recognises the proud naval shipbuilding history of Australia;

(2) notes that:

(a) the ability to build and maintain naval ships is essential to our national defence capability;

(b) over 4,000 skilled workers are currently employed in the Naval Shipbuilding Industry throughout Australia, most notably in Port Adelaide, Williamstown, Sydney, the Hunter and Henderson;

(c) as current contracted work reaches the end of the production phase, these jobs and shipyards will begin to come under threat; and

(d) once these jobs and skills are lost, it will be very difficult for the industry to be re-established; and

(3) calls on the Government to continue the work begun by the last Government and to provide additional Commonwealth contracts to ensure that these jobs and valuable skills are not lost.

Mrs Bronwyn Bishop (Speaker) Share this | Link to this | Hansard source

Is the motion seconded?

Tim Watts (Gellibrand, Australian Labor Party) Share this | Link to this | Hansard source

I second the motion.

Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

I move this motion regarding the future of the naval shipbuilding industry because it is an industry that is vital to our national defence capability. It is an industry that is essential for a maritime nation. It is also an industry that employs between 4,000 and 5,000 workers directly in regions such as the Hunter Valley, Melbourne, Adelaide, Western Australia and in Sydney. It is an industry that we must have in this country if we are to retain our national sovereignty. Four to five thousand workers are employed in this industry. There are many communities that depend on it, including in the Hunter Valley, where 900 workers at Forgacs have their direct future at stake in regard to the shipbuilding contract. If these contracts do not appear, the impact on local communities is going to be massive.

This industry is vital to our defence capability. Once it is lost it will be very hard to rebuild. A recent ANAO report into the air-warfare destroyer program commented that some of the challenges we are now facing in that program are a result of the shipbuilding industry being driven down after the completion of the Anzac frigate program in the early years of the last decade. This is an opportunity to learn from these lessons—to get it right and really put the industry on a sustainable basis. We need to be careful of unfair international comparisons on this industry. Some people will be tempted to look at how overseas industries perform and talk about effective rates of assistance. What is never mentioned in this context is that the shipbuilding companies they are compared to overseas are usually government owned and massively subsidised and often benefit from very long production runs that we do not have the benefit of in this country. We have a need to build 40 major naval vessels in the next 20 years, and I would submit that it is much better to have a smoother production cycle where the industry can plan and can build and maintain its workforce so that it has a sustainable future rather than a stop-start process, where at the moment 4,000 families are under threat.

Labor took a solution to the last election, which was to bring forward two supply ships and guarantee a certain amount of work to be done in Australia. We also talked about possibly looking at the patrol boat replacement. There are other options, including building a fourth air-warfare destroyer or in fact bringing forward the new frigate replacement and building that on the AWD hull, with simplified systems. I was pleased to note the positive comments made two weeks ago by the Minister for Defence. This should be a bipartisan solution. I am hopeful that those noises turn into concrete action, because we need to work together. Too many manufacturing jobs have been lost in this country recently, especially in the last three months. We have a proud shipbuilding legacy in this country. The Anzac class frigates were built on time and on budget. The minehunters built by Thales, up in Newcastle, performed very well. Also, despite some early teething problems, even the Collins class submarines present the best diesel capabilities in the world and have an excellent performance record. For example, in the US they scrapped the first example built of a new class of submarine, because of welding problems. By comparison, the Collins class is performing very well.

We need concrete action. I am very pleased that we have three speakers from the other side speaking on this motion. Hopefully they will come to this issue with a constructive approach. I pay tribute to the vigorous campaigning being done by local Labor MPs, including the members for Gellibrand, Newcastle and Port Adelaide, all of whom have shipyards in their electorate and are campaigning for local jobs.

This is a vital industry—900 families in the Hunter Valley depend on it, as do four to five thousand families around the country. We need this defence capability. We are a maritime nation and we need to be able to build and maintain our great vessels here, otherwise our sovereignty will suffer. I look forward to the contributions from others in this debate. I assure everyone that if we do not get concrete action this campaign will get more and more fierce, because our national sovereignty depends on it.

Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

We do have a proud history in shipbuilding, having built many great warships in the past. But we also had a proud history in the manufacture of horse-drawn carts, thermionic valves and a host of other industries that no longer exist. Indeed, Whyalla ceased shipbuilding in the 1970s. We need to allow our industries the opportunity to innovate. Rent-seeking simply sucks up money and inevitably the rent-seeking industries die, despite the use of public monies to try to prop them up.

Our nation's defence, and spending on defence capability, must not be a vehicle to provide for sheltered workshops in any industry. It is important to note that the current crisis in shipbuilding is a result of Labor's gutting of our defence budget by $18 billion over the next decade and pushing time lines and schedules to the right. Indeed, Labor left defence in such a mess that we need to get a new white paper and defence capability plan drafted. It is essential that the industry meet appropriate productivity benchmarks, to ensure that the industry does not get fat at the taxpayers' expense, as has been the case so often in the past.

As I have said, industry needs to innovate, not simply rely on Australian defence contracts to see it through. There is a clear example of this innovation in my home state of Western Australia. Austal have won contracts for littoral combat ships against the best shipbuilders in the world, not because of the largesse of the Australian taxpayer propping them up but because their products are highly innovative and they have developed a reputation for reliability and innovation. Austal also have contracts with the United States Navy for 10 Joint High Speed Vessels.

There was discussion about the issue of submarines, which is very problematic. For our next submarine, there is no conventional submarine in the world at the moment that can meet our requirements, meaning that we will have an orphan submarine capability. People might think we can just use a European sub, but you need to increase the air-conditioning load significantly, simply because of the temperature of the waters that we operate in versus, for instance, the North Atlantic. This alone means that you need a substantial redesign of the boat.

In my view, we should consider purchasing Virginia class submarines from the United States Navy, which would allow us to look at some of the niche capabilities that we have in Australia. For instance, some of our sonar capabilities are absolutely groundbreaking. These could go into not only our boats but the US boats as well, which would then give us a clear spiral upgrade path. We might not be making the boats in Australia, but we would have the ability to do shallow-level maintenance of not only our submarines but also the United States Navy submarines that operate in our area.

Let us take a leaf out of Austal's book. Looking at the technologies available, Sonartech Atlas have two sonar systems, called PIPRS and SAAPS, that are world-leading technologies that have been picked up by the Americans and the Europeans. We will never be cutting edge with conventional shipbuilding. We will always be paying over the odds in Australia for conventional capabilities as we do not have the critical mass, the volume of work, required to continue shipbuilding ad infinitum. According to the ANAO, the effective rate of assistance is over 30 per cent for indigenous shipbuilding. Treasury believe the premium to be over $1 billion. That is from the ANAO's Audit report No. 22 2013-14: Air Warfare Destroyer Program.

Once, we designed and built our own fighters and bombers. Then we just made fighters. Now we simply buy them already constructed. The reason for this is that they become more complex and the numbers purchased reduced, leading to issues of critical mass. The same thing has recently occurred with our car industry. Let us be innovative rather than simply harking back to the past.

Mark Butler (Port Adelaide, Australian Labor Party, Shadow Minister for Environment, Climate Change and Water) Share this | Link to this | Hansard source

I thank the member for Charlton and the member for Gellibrand for bringing this important motion to the House. I also thank members on the other side—even though I might not agree with many of the comments from the member for Tangney—for joining in this very important debate.

As the member for Port Adelaide, the importance of retaining our shipbuilding industry is of particular significance to me and the constituents that I represent in this place. Port Adelaide has an incredibly proud history of shipbuilding, which dates back to the early 1800s, when HC Fletcher established his shipyard at Birkenhead, in the port. The port was one of South Australia's earliest settlements and continues to be the main service point for South Australian shipping. The schooner Jane Flaxman was launched at Port Adelaide in 1839, only three years after the settlement of South Australia. It is true that there have always been peaks and troughs in the demand for our shipbuilders in the more than 150 years that we have been building them in Port Adelaide, and this was particularly the case after the two world wars of the 20th century, when there was a shortage of ships in Australia due to wartime losses and to a downturn in shipbuilding.

Today, at Osborne, near Port Adelaide, there is the home of the Australian Submarine Corporation, or the ASC as it is now known, the main shipbuilder for the three Hobart class Aegis air warfare destroyers—the largest Defence project ever undertaken in Australia. More than 1,500 AWD workers are based in Adelaide and there are a number of other spin-offs as well. Just one example is Le Fevre High School, in the Port Adelaide electorate. Le Fevre high is developing itself as a maritime high school, utilising the new trades training centre that was built under the last Labor government. This means, for example, that students at Le Fevre high today can learn skills in shipbuilding or engineering and move straight from school into apprenticeships at ASC, providing them potentially with great jobs for their entire working lives until retirement, just on the basis of the submarine building and maintenance program that Labor committed to. Similar stories exist in other schools—in the western suburbs, the member for Hindmarsh's electorate, and in my electorate in the north-western suburbs and the northern suburbs.

South Australia and the Port Adelaide electorate in particular fared very well under the former federal and state Labor governments when it came to defence jobs. South Australia currently has 25 per cent of all of the nation's defence work, in a state that represents only seven to eight per cent of the population. These jobs would be sustained and many more would be created with the former federal Labor government's commitment to replace the Collins class and double our fleet with the Future Submarine project, a commitment to acquiring 12 future submarines and assembling them in Port Adelaide. As well, the former Rudd government committed to bringing forward tenders for the replacement of patrol boats and two supply ships, HMAS Sirius and HMAS Success, to address the so-called valley of death—the period between work finishing on the AWDs and beginning on the future submarines. This commitment is vital for shipbuilding in the Port Adelaide electorate, vital for protecting the jobs of thousands of workers and retaining shipbuilding skills in our state and vital for Williamstown, the Hunter and elsewhere.

Six months after the election, though, we have had no such commitment from the new government, a deafening silence that is causing very deep unease in South Australia. My colleagues the members for Charlton and Gellibrand, who raised this motion, share my concerns. In Newcastle, Forgacs will have to lay off 900 staff by the end of this year if the government do not announce new shipbuilding projects, and more than 1,000 jobs are at risk at BAE Systems at Williamstown in Melbourne. This is not just a question of jobs, as important obviously as they are to those families and to those communities; it is critical for our long-term national security that these vital naval shipbuilding skills be retained and nurtured.

The last member to speak in this debate, the member for Tangney, compared this to the closure of the Whyalla shipyards, the shipyards that build commercial ships. Frankly, that misunderstands the strategic importance of having naval shipbuilding skills in an island nation like Australia. Port Adelaide's rich history as one of the nation's earliest shipbuilding sites must not be let down by this government. Our shipbuilding industry is far too important. Our national security as an island nation is far too important, and it is beyond time that this government acted.

Matt Williams (Hindmarsh, Liberal Party) Share this | Link to this | Hansard source

The member for Port Adelaide referred to the air warfare destroyers and the ASC—quite rightly; it is a fantastic project. It is a project that the member for Port Adelaide well knows was actually committed to, signed off and funded by the last Liberal Howard government—a project worth over $8 million. It provides jobs around Australia. The member for Charlton mentioned the jobs in his electorate at BAE Systems in Williamstown. It is a nation-building project. These are the sorts of projects that are of real value to our country.

The defence projects which were funded by the last coalition government include the SEA 4000 phase 3, the Armidale patrol boats and the SEA 1444, and we in this House all know that it is important to understand the time frame required in the venture of shipbuilding: when it starts and when you have the people in the dockyard cutting the steel and integrating the systems. This does not happen overnight. This takes years. This takes money and contracts.

It also provides spillover effects to our economy, gaining knowledge, fostering innovation and improving skills, so I think we all agree on the importance of shipbuilding in our country. But let us return to the comments of the member for Port Adelaide about the 2009 white paper and the 12 submarines to be built in South Australia. We found no money dedicated, we found no contracts signed and here we are five years later. This is the problem: we have not got the projects in place. We have not got the money committed. There was inaction, and I think the members opposite would acknowledge this fact. There was inaction in their last Labor government that has led us to this situation today—the valley of death.

I was working on this with colleagues both state and federal last year getting together relevant industry groups; the Defence team centred in Adelaide, Defence SA, which is doing a wonderful job; and David Johnston, who was the shadow minister at the time. We worked together on the future submarines project. I spoke about this in an economics submission I provided. It is valuable not just to South Australia but to Australia and to jobs throughout our country, and we will be working hard to get the best benefit for Australia from that massive project.

I also want to touch on the government's plan in terms of what we have done in the defence sector. As is well known, we have committed to no further cuts to overall defence spending within a decade and to increase defence spending to two per cent of GDP. In Adelaide just last week we also made some announcements on the Triton unarmed aerial vehicles. That is a $100 million maintenance commitment in South Australia. There is also the $78 million work for BAE Systems for the Air Force's Wedgetail aircraft, which will provide jobs in Newcastle, Brisbane, Ipswich and Adelaide—jobs around Australia.

Once again, these nation-building projects are vital to our defence sector. We had Labor, which was all talk and no action, lacking commitment and delaying decisions. Let me give some facts. We have 100 projects being delayed. We had 40 projects being reduced and 11 projects being cancelled. The Labor opposition cannot sit here today and say, 'It's all their fault.' They have to look into history, into what happened in the last six years of Labor government. A lack of commitment and lack of projects left us in the tough position we have now with financial pressures, a budget deficit and less money to spend on projects that we would like.

One of the projects I would like to touch on briefly is the JP 2048, which involved amphibious watercraft replacement. This project was one that had every opportunity to be manufactured and supported in Australia, but these jobs went to Spain. You did not see the Labor Party saying, 'Let's have these jobs in Australia.' They went to Spain. The units were manufactured in Spain. That is what we have to appreciate. We have had the opportunity in the past to put projects into Australia, and they have gone elsewhere. That is why with the next generation of submarines it is so important to have as much of the work done around Australia—in Newcastle, in Williamstown and in Adelaide at ASC—as we can. I know from visits to my electorate by the Minister for Communications, Malcolm Turnbull, and the Prime Minister that they are always well received when they come to my electorate. The electorate knows the coalition is committed to defence and committed to reinvigorating the funding to defence and defence projects. That is why we on our side can feel proud of our history and proud of where we are going in the future.

Tim Watts (Gellibrand, Australian Labor Party) Share this | Link to this | Hansard source

The member for Hindmarsh says the Prime Minister is well received in his electorate. We have not seen anything of him in Melbourne's west. My constituents have been waiting for action since the election of the Abbott government, but they have been left in limbo by the Abbott government's recent actions. Two-thousand five-hundred workers at the Toyota plant in Altona have been waiting for over a month for answers on how they are going to provide for their families after Toyota's closure in 2016. Hundreds of workers who supply Toyota with component parts are waiting anxiously as well to see if their government will introduce an innovation fund to bring new manufacturing firms to Melbourne's west so that their businesses will have enough work to continue operating.

But the community that is waiting with bated breath the most is the shipbuilding community—in particular, the over 1,000 workers at the BAE Systems shipyard in Williamstown. They are currently finishing construction on the Landing Helicopter Dock Ship project and the Air Warfare Destroyer project, the last of the major defence projects currently contracted to BAE Systems at Williamstown.

These workers are an essential source of technical skill for Australia's defence industry. With their expertise we are able to have a shipbuilding industry that can create the warships uniquely suited to Australian conditions. With their skills we can make sure that the warships that defend Australia are built in the shipyards they will be defending. These skills are too valuable to waste, particularly when considering Australia's long-term defence needs.

With the replacement of Australia's Armidale class patrol boats and submarines, and the frigate project needed in the near future, there is plenty of shipbuilding work required by the Australian Navy. There are around 40 ships planned for the coming decades. But none of these contracts have yet been signed and no commitments have been made by this government. So the shipyards are left waiting patiently as the clock ticks closer to the completion of their current contracts. As we near this completion date, the shipyards can wait patiently no longer.

Without these new defence contracts, the Williamstown shipyards will be forced to close. The much talked about 'valley of death' for the Williamstown shipyards has now arrived. Without a decision by the Abbott government in a matter of weeks, over 1,000 skilled workers will lose their jobs. This future is no longer a hypothetical; this is reality. It was flagged initially by BAE Systems spokesman Simon Latimer who said:

We need to make a decision about the long term future of our naval shipbuilding business by the second quarter of the year.

That is this year, and:

Work needs to be brought forward that will secure the medium and long term future of the yard.

This urgency was then reiterated by CEO, David Allott, at a recent speech to the Australian Defence Magazine conference, stating that unless further work is provided:

… we will have to start laying people off again at the end of this quarter and close the shipyard at the end of 2015.

Time is of the essence. BAE Systems could not be sending a clearer message. They need the Abbott government to sign contracts by the end of this month. They are not looking for government subsidies or support, just contracts for the work that the Australian government has already committed to publicly. They need work from some of the multitude of shipbuilding contracts that our Navy currently requires or they will be forced to close and lay off over 1,000 highly skilled workers. They can no longer wait patiently for these contracts while the Abbott government stalls and stonewalls. They need action now.

The Abbott government seems content, however, to lose our shipbuilding industry, as it has lost our car-manufacturing industry, by doing nothing at all. In the recent Senate estimates hearings, defence minister, David Johnson in the other place, gave no guarantees that defence contracts from the government would be forthcoming. Instead, he promised another defence white paper, to be delivered in no more than 12 months time—12 months, when workers are counting their futures in weeks and days! The arrogance of the Abbott government on this issue is staggering. Moreover, defence minister Johnson stated openly that the likelihood of funding these projects was questionable. He stated:

There is no money for these things. We have to rob Peter to pay Paul …

This is despite the Abbott government's promise to increase defence spending to two per cent of GDP in 10 years and their current acquisition of up to $3 billion of drones for maritime surveillance, without blinking an eyelid. It seems the shipyard workers are, indeed, 'waiting for Godot'; waiting for an Abbott government to deliver these workers that will never arrive.

The Abbott government needs to stop being an opposition party, wilfully ignoring what it cannot handle, and start being a government that stands up for the workers of Williamstown and Melbourne's west. As the CEO of BAE Systems said, 'Planning for success will require timely and courageous decisions, not only from industry but also from government.' Let us see some timeliness and courage from the Abbott government. It is time for this government to end the wait and to secure the future of over 1,000 jobs at the Williamstown shipyards. It is time for the former Leader of the Opposition to become a prime minister, and start showing some leadership on Australian jobs.

David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to be able to rise today and speak on the motion moved by the member for Charlton. I think it is very important to provide some context here in relation to defence spending and the various approaches to defence management that we saw under the previous government and under this one.

Of course, defence is the most fundamental responsibility of the federal government, and it is pleasing to see the interest of the member for Charlton in it, but it is very important to note the very poor treatment of Defence under the previous government. In fact, we are now in a position where, as a proportion of GDP, Australia is spending the lowest amount on Defence since 1939. That is some 75 years ago and it is an unacceptable situation. That is why the Abbott government has committed to making no further cuts to Defence spending and to getting Defence spending back to two per cent of GDP within a decade. The white paper process that we are working through at the moment will be critical to future projects. What the government is doing, in a methodical, careful and judicious fashion, is working through all of the issues related to Australia's Defence capability, including shipbuilding and many other issues. That white paper process will then report and the government will act upon those considered recommendations.

You have to contrast that, though, with the approach to Defence white papers under the previous government. In the Defence white paper back in 2009, the government solemnly said it would increase Defence spending by three per cent per year through to 2017-18 and then 2.2 per cent thereafter. Understandably, people in the Defence industry within Australia took some comfort from that. They said: 'This is good. The government has set out a clear commitment in relation to Defence spending.' But, of course, what happened was very, very different. What we actually saw was a cut in Defence spending of five per cent in 2010-11 and then 10.5 per cent in 2012, which was the largest proportional cut in the Defence budget since the Korean War. How could it help Australian Defence industries when, for politically expedient reasons, the former government hacked into Defence spending? The consequences included having 100 projects delayed, 40 projects reduced and 11 projects cancelled under the previous government. Obviously, these tend to be quite substantial projects given the nature of Defence, and that ad hoc approach to Defence expenditure was very damaging for the sector.

As I said, I acknowledge the interest of the member for Charlton in this matter, but the member for Charlton—perhaps in his previous role working with the previous member for Charlton, who, after all, was the Minister for Defence Materiel and Science—should have used his advocacy skills in that role, spoken to his boss and said: 'Look, you know these drastic cuts to Defence spending that you're sitting around the cabinet table planning? Don't do it, because it's not in the interests of the Australian military.' I am sure there were many discussions internally, but, unfortunately, he was unable to carry the day on those issues and those cuts did occur. They have been very substantial and very damaging.

Mr Conroy interjecting—

Indeed, we are in government, as the member for Charlton interjects, and that is a good thing because it means that, in a careful and methodical fashion, through the white paper process, the government will assess all of their very complex matters related to Defence funding and make appropriate decisions as we go through that. When the previous government came into office, 5.7 per cent of government outlays were in Defence. By the end, it was 4.9 per cent. That is a very substantial change as a proportion of government expenditure. We all acknowledge the significance of Defence and Defence planning and the government is committed to it.

Debate adjourned.