Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

You have heard the truism many times before: small business is the engine room of the Australian economy. I am proud to be part of a coalition government which values and supports the aspirations and hard work of private enterprise. Equally, I am proud to be part of a government which is investing a record $200 billion in the Australian Defence Force's capabilities. As we on this side of parliament know, increased investment and strategic policy environments drive economic and employment growth. With our government's already record jobs growth achievements, I look forward to the added benefits that will bring.

The Ryan electorate is home to Gallipoli barracks, Australia's second largest Defence base, and is also a short drive from RAAF Amberley and has a large contingent of veterans and retired service men and women. The Ryan electorate is also home to a number of niche businesses, partnering with our defence industry. The coalition government is investing in our defence industry, creating jobs all around Australia. To demonstrate the significance of small to medium enterprise involvement in defence projects, I refer to BAE Systems Australia and their contract to build the nine anti-submarine warfare frigates. BAE have already prequalified more than 550 companies, small and medium enterprises, in their supply chain around Australia. It is a national project, and included in the 550 companies are 57 from Queensland. These are 57 local companies, employing local workers and making a significant contribution to our economy. There are 4,000 jobs directly attributable to the project and in the direct supply chain.

Closer to my electorate of Ryan, I refer to the announcement of Rheinmetall as the successful proponent to deliver Australia's new combat reconnaissance vehicle, the Boxer, for Land 400 phase 2—mounted combat reconnaissance capability. During the 30-year life of the vehicles, Australian industry will deliver two-thirds, or $10.2 billion, of the acquisition and sustainment, which will create up to 1,450 jobs right across Australia. As a former serviceman himself, Rheinmetall Defence Australia's Managing Director Mr Gary Stewart, a local Ryan resident, understands the importance of the contribution that specialist small and medium businesses have for his company's large defence project.

The coalition is growing Australia's defence industry, and we are ensuring that companies like Brisbane based Haulmark Trailers will get that work. Haulmark Trailers will build 800 trailers in Brisbane as part of the trucks, trailers and modules contract that was recently announced. Also consider Varley Group Australia's joint venture with Israel's Rafael for the Spike LR2 fifth-generation missile system, manufactured and supported in Australia for the Land 400 program. We are literally opening doors for Australia's businesses to engage in opportunities never before seen.

I have not mentioned Labor's contribution to Defence during my speech because, well, there's nothing to mention. Under Labor, spending on Defence dropped to 1.56 per cent of GDP, the lowest since 1938, the last year of appeasement. Because of the coalition's management of the budget and the economy, we will achieve two per cent of GDP in 2020—a year ahead of schedule, a year ahead of what we had promised. It is simply because we are pulling our weight. We want to be a good ally and we want to look after Australia's national interests. The Leader of the Opposition's war on business is a war on jobs. His war on business is a war on growth and a war on the Australian economy. It is also a war on family businesses and small and medium enterprises, and a war on wages. Significantly, the manufacturing of parts and service offerings of Australia's small businesses not only are for use for our home-grown defence industry but also demonstrate a huge export potential. Again, investment in industry by the coalition is a core tenet of good economic management and ensures that Australian small businesses have a large, big impact.

Australia's defence industry has a range of world-leading capabilities and is well positioned to meet our current and future capability needs. The coalition government is ensuring that our ADF, whether it is the Army, the Air Force or the Navy, has the capabilities to keep us safe in the 21st century. To do this we rely on the skills and expertise of Australian small businesses, and I encourage all of them to explore opportunities to supply their products and services to the ADF. I thank my colleague the member for Fisher for this motion and look forward to working with Queensland counterparts to encourage and grow private sector involvement in the defence industries. I commend this motion to the House.

Cathy O'Toole (Herbert, Australian Labor Party) Share this | Link to this | Hansard source

As the member for Herbert, I'm extremely proud to represent the largest garrison city in the nation. Last week the opposition leader, Bill Shorten, and the shadow minister for veterans' affairs, Amanda Rishworth, visited Herbert to make two significant announcements. Firstly, Labor announced that a Shorten-led Labor government would look to increase the presence of the Royal Australian Navy's amphibious assault ships, known as LHD vessels, at the Port of Townsville. This will create new jobs and further diversify North Queensland's economy.

Townsville is the natural home to expand the nation's capacity in relation to the ADF's amphibious capability. Increased port activity will support real local economic development for Townsville, helping to grow a local defence maintenance industry. That is something that the Townsville business community has been looking to expand further over a number of years. The regular docking of LHD vessels at the Port of Townsville would allow for a continuous program of maintenance work, which is expected to support between 200 and 400 new jobs that will be ongoing for local residents.

This announcement will also facilitate important exercise activities, including, most critically, those related to the joint amphibious capability of the Australian Defence Force. I lobbied strongly for this announcement, as I believe that our city needs to keep developing a local defence industry that creates a sustainable deep maintenance industry. On average, 500 Defence personnel annually transition out of the ADF into my community. This initiative will provide new future employment opportunities for these men and women whilst also creating additional local jobs, including apprenticeships. I want to commend the detailed work undertaken by the Townsville City Council, the Port of Townsville and Townsville Enterprise to secure a greater presence of LHD vessels and their support for a strong defence industry for our region.

With a number of major new naval platforms coming online over the next decade, existing port arrangements are coming under pressure, making our capacity to meet all of our defence posture requirements increasingly unsustainable, as recognised in the government's own 2016Defence white paper. Labor recognises the future need to balance port arrangements through providing complementary options in logical locations to take the pressure off permanent bases such as Garden Island in Sydney. Townsville will be a major beneficiary in meeting these requirements and is a logical location for a contemporary port for the LHDs, given we are home to the Army's multirole and rapid response 3rd Brigade and the amphibious light infantry battalion, 2RAR. Townsville is also uniquely placed to support forward ADF operations in the region, including humanitarian assistance, and bilateral and multilateral activities with our regional partners. This initiative is great news for Townsville and is part of Labor's plan for real jobs in regional Queensland.

But Labor hasn't stopped there in announcing policies that will support our current service and ex-service men and women and veterans. On the same day, Labor announced that a Labor government will sign and establish Australia's first military covenant, a formal agreement that will ensure our nation's Defence Force members are fully supported during and after their service and that will recognise the significant commitment that our armed services make in serving our country. What is most important about this announcement is that Labor will also introduce legislation that will require future governments to report annually to the parliament on how they are meeting their responsibilities in supporting our service and ex-service personnel. The inclusion of accountability ensures that we are measuring outcomes and not just speaking words. The covenant will be similar to the United Kingdom's Armed Forces Covenant, a document of principles promising those who serve or have served in the armed forces, and their families, will be treated fairly. Labor will work with the Australian Defence Force, the Department of Veterans' Affairs and ex-service organisations to draft relevant wording for the military covenant and associated legislation. The covenant will make sure that those in need do not simply fall through the cracks.

I want to acknowledge the strong advocacy work of ex-service organisations, particularly ADSO, and especially local Townsville advocate Ray Martin, whose work and advocacy for the defence covenant over the last nine years must be recognised in this place. Those who put their lives on hold to serve our country deserve to know that we acknowledge the sacrifice they and their families have made in serving our nation and that we are committed to being there for them in their time of need. Signing the covenant builds on Labor's previous commitments to the current and ex-serving Defence community, including our $121 million veterans employment policy and our family engagement and support strategy. I call on this government to make a bipartisan commitment to getting behind Labor's policies. (Time expired)

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It's a pleasure to rise today to speak about the government's record investment of some $200 billion in the Australian Defence Force's capabilities. More importantly, with that $200 billion investment pipeline being rolled out, I want to speak today about the positive impacts being felt by small business across Australia. The program provides an outstanding and unique opportunity for Australian business, and the economic and social benefits of it are good not only for businesses but for the communities in which they're located.

A perfect example of this is located in my electorate of Forde. The engineering company Holmwood Highgate has been successful, in conjunction with Haulmark Trailers, in winning a key part of the $1.4 billion Australian Defence Force contract better known as LAND 121. This project will see the replacement of the ADF's fleet of ageing vehicles and trailers, many of which are in excess of 30 years old and are costly and difficult to maintain. Holmwood Highgate was first established in Brisbane in 1950 to supply road tankers to companies like Shell and Caltex. Sixty-eight years later the company is recognised as a great example of dedication to task, good management and a commitment to excellence. This has resulted in steady and measured growth, and today Holmwood Highgate employs 140 people at its Loganholme manufacturing facilities. The awarding of the Defence Force contract is great news on a variety of fronts, not least of which is the creation of new jobs.

To carry out this ADF contract, the company will employ an extra 60 people, providing work at least until 2023. That's 60 more jobs added for years to come at a small business in my local community. It's absolute confirmation, if ever it was needed, that this government's support for investment in small business in our nation means jobs and security for workers and their families. But I'm pleased to say that it doesn't end there. The government's program also means that Holmwood Highgate will invest $2 million in additional capital equipment to carry out the LAND 121 contract and will outsource more than $25 million of associated works to local businesses. It's a multiphase program, providing the Australian Defence Force with the next generation of high-capability field vehicles, modules and trailers. The project will include 1,044 vehicles, 812 trailers and 872 modules. These will be used for military contingencies, for resupplying combat operations and for supporting the ADF's assistance to Australians after natural disasters such as floods, fires and cyclones. It deserves repeating that this government's injection of funds into Holmwood Highgate through the LAND 121 project will provide employment and business opportunities for the people in my electorate for many years to come.

Australia currently ranks 13th in the world for defence expenditure, but is only the 12th-largest exporter. There can be no doubt that the opportunity is there for Australian companies to compete in this lucrative export market. In fact, many Australian businesses who first supply defence materials to the Australian government go on to export these products overseas. I know from my discussions with Holmwood Highgate that that is exactly what they are looking to do. Their CEO, Wade Mellish, has spent significant time in the US talking to the US defence industry about how the technology they have developed here could be of use to the US. The government's efforts to develop the Defence Export Strategy to guide and measure these defence export outcomes will also support our capabilities in this space.

Overall, this shows that it's the government's commitment to ensure that Australian small and medium-sized businesses have an opportunity, through the defence industry statement and through the Centre for Defence Industry Capability, to take part in the opportunities that will be created through a $200 billion long-term investment in building our national defence capabilities. Once again, it is a practical example of this government delivering what is needed for our country on an everyday basis to ensure we have jobs and a growing economy.

Gai Brodtmann (Canberra, Australian Labor Party, Shadow Assistant Minister for Cyber Security and Defence) Share this | Link to this | Hansard source

If any of those opposite bothered to actually speak to a microbusiness, speak to a small business or speak to a medium-sized business trying to contract with Defence, they would quit with the high-fiving that we have seen in this motion. I used to be a microbusiness, contracting to Defence and to government agencies. I did it for 10 years before I entered politics. I know the challenges of getting on a panel. I know the challenges of having to provide years of records and years of references—virtually, your firstborn—just to get on a panel. I know the challenges of getting work once you are on the panel, and I know how many highly skilled and experienced microbusinesses and small businesses are being forced to contract to primes and multinationals just to get work. If those opposite actually had a conversation with microbusinesses and small and medium businesses, they'd be hearing this firsthand and they would quit with the high-fiving that we see in this motion.

I've also spoken to business chambers across Australia in my role as shadow assistant minister for defence. I've spoken to them about their frustration at getting a fraction of the work on Defence sites, particularly in remote and regional centres like Katherine. I've spoken to microbusinesses and small and medium businesses about their frustration at having to subcontract to primes, and often to subcontractors to those primes, just to get a fraction of the Defence work, and about the fact that they are billed out by the primes or subcontractors at $500 an hour and are getting paid $150 an hour. If those opposite bothered to speak to microbusinesses and small and medium businesses, they'd be hearing this firsthand. They would be hearing that these businesses are carrying a load of contracts and are not acknowledged for their work; they are bringing significant intellectual property to the contract, which is often required to be passed on to the prime or the subcontractor; and they are bringing agility, innovation, new ideas, invention and efficiency to a contract, which is again attributed either to the prime or to Defence. They would be hearing that CASG's new contracting arrangements compel microbusinesses and small and medium businesses to contract to a handful of consortia. They would be hearing about the lack of certainty of work and time lines and the fact that these microbusinesses and small and medium businesses have to lock into long-term rates for short-term contracts. This is the current environment in CASG at the moment with these new contracting arrangements.

If those opposite bothered to speak to microbusinesses and small and medium businesses, they'd hear about the risk aversion in Defence and the comfort and ease it gains from dealing with the big end of town—the large multinational contractors and Defence primes. This is so very different from what we see in Israel, where risk is managed and mitigated but is seen as important for cutting-edge, leading-edge technology, innovation and new ideas. There is an acceptance of a level of risk in Israel, which is at the forefront of so many defence innovations. If those opposite bothered to speak to small and medium businesses and microbusinesses, they'd hear about the fact that those businesses just want Defence to buy one of their products—just one. This is what I heard from Penten, which is coming up with some amazing ideas here in Canberra. They just want Defence to buy one of their products, to test it, to trial it, just to get a foot in the door. And they speak about the fact that they want a brave Public Service to support local industries and support Australian-made defence products here in Canberra and right across the nation.

I ask those opposite this very important question: hearing all those comments from microbusinesses and small businesses, how do they know that so much Defence work is going to the SME sector? In its report of December last year, Australian government procurement contract reporting, the Australian National Audit Office found that multinational primes such as PwC and EY are being incorrectly tagged as small to medium enterprises. The ANAO found:

… a number of businesses with large numbers and values of contracts in 2016-17 that appeared to have been classified as SMEs. These included major consultancy/accountancy firms and other Australian arms of large global business with thousands of employees.

In other words, the official statistics that showed that between 24 and 42 per cent of government work is being won by SMEs are wrong. They are wrong because the use of multiple Australian business numbers by major firms is leading to their miscalculation as SMEs. I say to those opposite: quit the high-fiving and focus on a reality that misleading government statistics are hiding, so that we have no idea about the scale of the problem. (Time expired)

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

The Federation Chamber will suspend until the chair is resumed.

Sitting suspended from 11:39 to 11:43

Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

Defence and the defence industry sector are incredibly important to the economy of the Northern Territory. Many Territory businesses supply quality products and services to the Australian Defence Force, and NT business groups advise that things have improved a bit in recent times, which I'm glad to hear. There is still room for improvement. That was my message when I recently spoke at a defence industry event. I'm always happy to acknowledge when there is some progress by the government of the day in relation to local companies having a better go at getting defence contracts. However, I also acknowledge that there is still some way to go, and I'm very glad to be part of the process in the opposition of developing policy that is going to go even further in improving access to defence work for companies, particularly in regional areas like the Northern Territory.

As the member for Fisher noted in his motion, many Australian businesses who first supply defence materials to the Australian government go on to export these products overseas. This is a very important issue because, in addition to the immediate economic benefits of defence work to our local communities, longer term it helps to build the capacity of the Northern Territory and other regional economies because there is a flow-on effect to the economy at large. Defence work helps to build skills, knowledge and experience, and catalyses other opportunities across construction, marine engineering and resources.

Last week, I attended the LAND FORCES 2018 conference in Adelaide. It was a great chance to catch up with Territory businessmen like Paul Sharp from ENZED service centre in Darwin and other Territorians, such as Janet Phillips from Territory Surgical Supplies; Anthony Bellottie from Norship; and, of course, Kerryn Smith, our CEO of the Australian Industry Defence Network Northern Territory. Kerryn introduced me to many other Territory businesses and also to Rob Forbes, who is the national president of AIDN-NT, and Paul Johnson, who is the co-chair of the Centre for Defence Industry Capability. It's very important that we use every opportunity available to us to improve the access that Territory businesses have into the defence industry opportunities that abound.

I appreciated speaking to all those Territory businesses about some of the challenges and opportunities they see for accessing defence work, and also about some ideas about how we can better work together to help Territory businesses get more of those defence contracts. I was personally proud, whilst at the LAND FORCES 2018 conference in Adelaide, to make connections between Territory businesses—the primes—and those in the defence industry who are making the decisions on where the work goes.

Recently, I spoke to the AIDN-NT about the importance of doing business with the US military in the NT. Again, I want to thank Kerryn Smith, the CEO of AIDN-NT for her great advocacy work to help Territory businesses get some of that work and succeed in the industry. Jim Eadie from Sunbuild spoke at that event, and it was great to hear from a construction manager who has been successful in getting some of that US government work. Bill Savarino also spoke. He has a long history of helping companies get contracted work with the US government.

We're getting feedback from Territory businesses that we're on the right track in terms of getting more of a go for SMEs, but there's more that we can do. Territory businesses have really appreciated the opportunity to speak with the shadow minister for defence, Richard Marles the member for Corio. Territory businesses ultimately just want a level playing field. They're not asking for special treatment via special tax zones at this stage, but they know they can compete with the best that Australia and the world has to offer. With more of a level playing field, they will go from strength to strength, becoming an important part of our national defence industry network.

Mike Kelly (Eden-Monaro, Australian Labor Party, Shadow Assistant Minister for Defence Industry and Support) Share this | Link to this | Hansard source

It's a great opportunity to speak in relation to this motion on an area where there's a lot of potential for bipartisanship. Of course, on our side we have been more than happy to engage in that open-armed approach to make sure that Australian industry has the maximum opportunity to participate in the defence industry space as it's going forward with the potential that new technology and programs that are coming on stream offer to them.

Unfortunately, the current Minister for Defence, the former Minister for Defence Industry, tends to play shameless politics in this space. He's claimed that they're the ones who have done everything in relation to promoting small and medium enterprise participation, but it simply isn't the case. What we have seen during the five years of the Abbott-Turnbull-Morrison government has been, firstly, a period when a lot of stuff was derailed through the captain's picks of the Abbott era, but also the rebadging of what were Labor programs. I remember very vividly, as part of the Defence portfolio, the programs that we put in place to assist small and medium enterprise, which included the defence export unit. The defence export unit was very successful in enabling about 240 companies, from 2007 onwards, to get contracts in excess of $760 million. That was under Labor. We established that defence export unit. We established the Australian Military Sales office for facilitating commercial-to-government and government-to-government sales, which also resulted in many millions of dollars worth of deals. We established the Global Supply Chain Program, which enabled 90 per cent of the value of our activities in that space to fall to SMEs—262 contracts for 59 companies, with over $550 million worth of opportunities achieved.

We had many other industry support programs that provided great assistance to industry, like the Skilling Australia's Defence Industry, or SADI, program. Under that scheme, 26,500 training places were made available, including 3,000 apprenticeships. We've seen 140,000 apprenticeships disappear under this government, which is quite a stark contrast to what Labor was able to do in government in supporting those companies. There were 200 companies that participated in that SADI program. We established the Defence Industry Innovation Centre, which assisted hundreds of SMEs. Five hundred and seventy different companies were introduced to formal agreements to enable them to develop their technologies, their innovations and their business space to participate in defence industry.

In addition to all of those measures, I could go on for quite some time to talk about other mechanisms that we established. But there are still a lot of issues out there for Australian SMEs, which I talk to all the time in my role as the shadow defence industry minister. They particularly relate to dealing with Defence and dealing with primes, and the relationship between SMEs and primes. There needs to be a greater investment in facilitating that relationship and making sure our SMEs are dealt with fairly in working with primes. That includes getting paid on time, which otherwise creates severe buffeting for a lot of them. The CDIC process that the government established, which was meant to facilitate and assist industries, is not working anymore. It's broken because it cannot keep pace with the volume. Effectively, we need something with much wider scope and capable of facilitating the participation of SMEs in these processes and their development. The SADI program was axed by this government and replaced by a really ad hoc private operation which has not met needs. I talk all the time to companies that would like to see the SADI program brought back, because they got great value out of it.

What we've also seen with the massive shipbuilding effort, which will arrive over the next couple of decades, and with projects like Land 400 is that the skilling plan is just not there. We have seen a glossy pamphlet but no substance behind it. All the industry participants out there say to me all the time that they can't see how they're going to deliver the skilled workforce of the future. It would be Labor's intention in government to seriously address the issue of defence industry support, providing better identification of capacity and facilitating the further development of that capacity. In addition, we'd make sure there was a national, coordinated effort to build the skilled workforce needed to deliver these projects into the future. It's a great opportunity, but it needs a government that's not divided, inward-looking and focused on its own issues but looking at the future for Australia.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

There being no further speakers on the motion, the debate is adjourned. The resumption of the debate will be made an order of the day for the next sitting.