Luke Howarth (Petrie, Liberal Party, Shadow Minister for Defence Industry) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that:

(a) under the current Government, decisions to conduct review after review into defence and defence industry have resulted in unreasonable delays in awarding contracts; and

(b) these delays have led to uncertainty for small and medium enterprises, threatening many businesses, and forcing them to consider leaving the industry;

(2) acknowledges that:

(a) the Government's agreed recommendation from the Defence Strategic Review, stating that Australian industry content and domestic production should be balanced against timely capability acquisition, requires financial support from the Government;

(b) without such support, there is a risk of losing more contracts overseas;

(c) the Government's agreed recommendation from the Defence Strategic Review, calling for an increase in defence funding to meet our strategic circumstances, has not been meet in the    .2023-2024 budget;

(d) the Government should legislate a minimum number of missiles stockpiled to ensure Australia's National Security; and

(e) the Government's disconnect with Australia's defence industry should alarm all Australians because it shows a lack of understanding of the challenges facing Australia's defence industry; and

(3) calls on the Government to take real action in supporting and growing Australia's sovereign defence industry and boosting Australia's dwindling defence budget.

I note that under the current government, the Albanese government, decisions to conduct review after review into Defence and the defence industry have resulted in unreasonable delays in awarding contracts. These delays within the defence industry have led to uncertainty for small and medium enterprises in particular, threatening many of those SME businesses and forcing them to consider leaving the industry.

What is the industry body saying about this? Brent Clark, the CEO of the Australian Industry Defence Network, says this in relation to delay after delay by the Albanese government in the defence industry: 'Apparently our strategic circumstances are so dire and so consequential that the Defence Strategic Review had to change the Australian industry involvement to simply being an achieved item as long as we do not hold up gaining capability. We will say that any opportunity we have, we will say that to any journalist we can and we will say that to Defence when we have to do. This is not a Defence issue. This has nothing to do with the Department of Defence. This has everything to do with our politicians. We do not believe that this government, the Albanese government, is treating small and medium enterprises in a fair and equitable manner.'

He went on to say, 'The DSR has opened a can of worms that cannot be closed. The DSR, by virtue of saying that speed to capability trumps Australian industry involvement, means that at every turn the excuse of not using an Australian company will be viable. Why? Because you actually have to put effort, time and money into getting Australian companies qualified for supply chains. If I have a pre-qualified company from overseas, my speed to capability is faster. We are not having a go at any prime contractor in this; this is wholly and solely directed at the federal government'—the failure of the Albanese Labor government. We acknowledge the government's agreed recommendation from the DSR, stating that Australian industry content and domestic production should be balanced against timely capability acquisition, and that requires financial support. The issue is that there isn't financial support. There is absolutely no new money from the Albanese government in the forward estimates in the next four years—not one new dollar.

Members here could imagine if we were in government and we came in and said, 'No new money for education, no new money for health, no new money for the ABC' or whatever. Imagine how those opposite would react. Worse still: we've actually heard the defence minister in this place come in and say it's not how much money it is; it's how you use the money. Can you imagine if we said that about schools? What would those opposite say? They'd be hitting the roof. But, when it comes to Defence, the DSR states that we have a short time frame, and, for those watching, there is not one new dollar from this government in the next four years. In fact, CASG is cutting billions of dollars out of Defence. They need to cut another $4.3 billion out of Defence to achieve their aim, and this is actively removing small and medium enterprises from the supply chain.

If we were at war, for example, the missiles for our frigates would be gone in 30 minutes. Then the ship has to sail back to shore. 'Where are the stockpiles?' We've got no stockpiles. What are the minimum stockpiles that this government has set in the last 18 months? They've ordered nothing when it comes to 155-millimetre munitions. We have enough munitions to last a week, all under the Albanese Labor government. With HIMARS missile capability delivered from the DSR—the only thing—they are first due to be delivered in 2026, and to date the project hasn't even been allocated a number for purchase. How many defence industry companies have the minister or the Minister for Defence Industry met with? There are very few. As I've moved about South Australia, Victoria and Queensland, there have been very few.

Labor is asleep at the wheel. Do better. It's not just words; show us your actions. You need to do far better.

Alicia Payne (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Phillip Thompson (Herbert, Liberal National Party, Shadow Assistant Minister for Defence) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

David Smith (Bean, Australian Labor Party) Share this | Link to this | Hansard source

I'm pleased to be able to rise to speak to this private member's motion. I'm pleased to have the opportunity to discuss all the good work the Albanese government is doing in defence, contracting and procurement. At the same time, I am perplexed; the member of the Petrie's motion seems to have forgotten the last decade. The motion decries the fact that our government has initiated reviews into Defence and defence procurement. This ignores the fact that these reviews remain necessary due to the shameful mismanagement in this space by the government of which the member was part.

On the side of the House, we understand deeply the complexities of defending our country and the detail which underpins that important endeavour. We understand the vital importance of our defence industry not only for capability development, not only from the perspective of sovereign capabilities but also for growth and job creation. Indeed, I understand these issues well. It's no secret that I worked for many years for Professionals Australia, the union representing white-collar defence industry workers. I worked closely with Defence workers across the economy and at almost every level of the procurement and manufacturing process. I saw first-hand the atrophy and drift the previous government inflicted on the defence industry sector. The lack of action and the lack of direction left industry players at a loss and unable to make plans or see a future for themselves here. Our defence industry workforce found itself in a directionless state. I found this situation utterly frustrating and unacceptable, as did many of my colleagues. That's why we came into government with a commitment to fix our defence posture and our defence industry policy, and that's exactly what we have been doing.

Let's not forget the absolute mess in defence industry and procurement that we inherited upon taking government last year. The ANAO told us in October last year that a series of projects are facing major delays and budget blowouts. The combined value of these projects comes to more than $69 billion. As defence expert John Blaxland put it today, defence procurement has been 'messy, expensive and inefficient'. What are some of these projects? One is the Hunter class frigate program, beset by major delays in the start of construction to the tune of four years, with a $15 billion blowout in costs, all hidden by those opposite when they were in government. Another is the C-27J Spartan battlefield airlifters. This capability was delivered four years late, and, despite their name, the C-27J Spartan battlefield airlifters cannot actually fly into a battlefield. Then we have the offshore patrol vessel project, a critical capability for our border security. This project is already one year behind schedule. Similarly, the evolved Cape class patrol boats are a year late, the new battlefield command system is three years behind schedule, and then there are defence satellite communications projects, which are running up to four years behind schedule. These projects are all critical to our security and enhanced defence capabilities. Their successful and timely completion are critical to the security of the country. A policy and culture of atrophy and drift from those opposite let these and other projects wither.

This drift not only jeopardised our security but robbed our domestic defence industry of the certainty needed to make contract and investment decisions. When the member for Petrie complains about the challenges facing Australia's defence industry and looks for someone to blame, I'd suggest he find a mirror. Indeed, he is part of a government that had six defence ministers in nine years. Their record on the question is one of abject failure. It is a failure that we are here to correct. The Albanese government is committed to ending the drift and atrophy in Defence and building and strengthening our domestic defence industry. We will enhance and strengthen our defence industry by giving it clarity and guidance. We'll give it clarity and guidance through our soon-to-be-released defence industry development strategy. Through this, we will grow our sovereign industrial base and provide more opportunities to our defence industry to participate in a meaningful way in big projects like AUKUS. We are getting on with fixing the mess left by those opposite. Stunts like this private member's motion just demonstrate that they have learnt nothing.

Aaron Violi (Casey, Liberal Party) Share this | Link to this | Hansard source

I want to commend the member for Petrie for this important PMB today. It's no doubt that if we get a strong defence industry it plays a key role in our national security. The Albanese Labor government unfortunately have become obsessed with reviews, roundtables and discussions, and it's having a profound impact on all Australians. While Australians grapple with the rising costs of living, energy prices through the roof and some of the most uncertain times for our nation in terms of national security, the only action that this government has taken is to announce review after review. Importantly, this is having a devastating impact on Australia's defence industry, which has been left grappling with uncertainty created by those opposite. Anyone who has worked in business knows how important certainty is for businesses. It allows them to invest capital, to get their workforce structure right and to service loans. The Albanese government is not providing this certainty for industry. The Australian Financial Review reported on 11 April this year:

Australian defence firms say they have been forced to delay investment and hiring decisions because the federal government is holding off making acquisition decisions …

With nothing but uncertainty from the people running this country, businesses can't invest in machinery, they can't invest in upskilling staff and they can't make plans to secure our ongoing national security. That's what this government is playing with. This is despite the government's agreed recommendation of the Defence strategic review warning of Australia's 'deteriorating strategic environment' and calling for an increase in defence funding to meet our strategic circumstances. That funding has not been forthcoming from this government. The review found that Australia's industry content and domestic production should be balanced against timely capability acquisitions, but this requires financial support from the government. Without financial support, we run the risk of losing more contracts overseas, which would negatively impact on our sovereign capability. We will lose the ability to make those things that are so crucial for our defence industries, our defence and our country. With pillar 2 of AUKUS having a focus on AI, quantum, hypersonics and cybersecurity, it is vital that we have a strong and robust defence industry to execute on these technologies and develop our sovereign capability.

And it's not just around this strategic review. Another great example of this government not being prepared to make the right decisions in our national security is not having a minister for the digital economy to make sure that these AI businesses, cyber businesses and cybersecurity can work in our defence industries but also in our domestic economy, building their strength. I had the opportunity last week at a Tech Council event to speak to quantum companies and to AI, and they were talking about the synergies and opportunities in defence industry and the commercial sector. This government is dropping the ball in both spaces, which impacts our national security. It's important that we support Australian businesses in the defence industry.

One great example of an innovative business is SYPAQ, which has developed low-cost drones under a $1.1 million Defence Innovation Hub contract from the previous coalition government. These are drones made of cardboard. They come flat packed and can launch—flying up to 120 kilometres—and land by themselves. These have been manufactured here in Australia—down in Melbourne, actually—and are now being sent to Ukraine to help the Ukrainian forces. This is just one example of Australian innovation and ingenuity creating jobs in Australia and securing the national security.

The Albanese Labor government's disconnect with the Australian defence industry should alarm all Australians because it shows their complete lack of understanding of the challenges our nation is facing. It shows a lack of urgency around what is arguably one of the most important roles of a federal government: protecting our borders and keeping our nation safe. I urge the government: don't spend so much time looking in the rear-vision mirror and talking about the previous government. You're no longer in opposition; you're now in government. Now is the time to take action and make decisions. Stop talking about the past and actually take some ownership and deliver for the defence industries of Australia so we can have strong national security. Protect our dwindling defence budget, and advocate your Treasurer to increase that spending.

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

GOSLING () (): I obviously welcome this motion because it goes to unreasonable delays in awarding defence contracts, and I will reflect a bit on a decade of not much—I'll get to that. I welcome this motion because our government, the Albanese government, has been very busy for a bit over a year, fixing up the mess that the former government—the coalition; those opposite—left us when it came to defence industry. They talk a big game, as they're doing this morning, but they really failed to deliver. Our government is determined to provide the clarity and guidance that industry needs to make informed business decisions based on Australia's priority. Later this year our government will release a defence industry development strategy that will set out a plan to grow the industry's workforce to deliver a viable industrial base and increase Australia's defence export. There's nothing that makes me prouder than seeing Australians apply their trade and their significant know-how to make stuff that is the best in the world.

We are committed to supporting the Australian defence industry so we can make more of the critical defence equipment that we need here in this country. We're also delivering the AUKUS submarine program with our partners, which is the most transformative industrial endeavour in our history. It will exceed the scale, complexity and economic significance of the creation of an Australian automobile-manufacturing sector, which those opposite wrecked, or of the construction of the Snowy scheme.

The program will create around 20,000 direct jobs over the next 30 years across industry, the ADF and the Australian Public Service: tradies of all sorts, operators, technicians, engineers, scientists, submariners, of course, and project managers—very important. At its peak, that AUKUS program will be building and sustaining nuclear powered and conventionally armed submarines in Australia and will create up to 8,500 direct jobs. That's just pillar 1 of AUKUS—the submarines. Of course, there'll be many more jobs and opportunities with pillar 2. Our decision to build infantry fighting vehicles in Australia will also support up to 600 direct jobs and many more indirect jobs.

On 1 July, the government launched the Advanced Strategic Capabilities Accelerator, less than three months after the government received the Defence strategic review. Our government is investing $748 million in these capabilities over the next four years and $3.4 billion, with a b, over the next decade. This is an additional $591 million above planned spending on defence innovation over the decade.

We're also focused on reforming Defence to make it a better customer for industry. Many defence projects are very complex and are at the cutting edge of technological, engineering and industrial capability, so they inevitably involve more risk. One problem—and there were many under the former government—was that defence ministers—and there were lots—failed to provide the leadership needed to effectively manage those risks. I can't recall, but I think the previous speaker said they had six ministers for defence over three terms of government under Abbott, Turnbull and Morrison. I actually think it was seven defence ministers, because you remember there was that bizarre time when there were Pyne and Paine and no-one really knew who was responsible for doing anything. As it turns out, no-one really was and nothing really got done, apart from requiring monthly reports on projects of concern or interest to the ministers for defence and defence industry.

Opposition Members:

Opposition members interjecting—

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

I've spoken a lot about what we're doing and our government's response to the DSR, and I would compare this with the record of the opposition when it comes to defence industry policy. I think that's what those opposite who are interjecting want me to do. They were all talk and absolutely no action. They were all talk and no walk. They were all hat and no cattle. They were all red carpet and Top Gun music, but, when it came to actually delivering defence capability, we knew they really weren't up to it. The Morrison government's investment in defence saw key projects blow out in both cost and time, but we're fixing the mess created by the coalition.

Honourable members interjecting—

Phillip Thompson (Herbert, Liberal National Party, Shadow Assistant Minister for Defence) Share this | Link to this | Hansard source

Interject as much as you want. I would like to start by acknowledging our brave men and women who put on the uniform every single day in support of this nation. I say to them: I know that the freedoms that we enjoy are on the back of hard-fought battles that you and our forefathers have fought in, and we want to say thank you.

I commend the member for Petrie for moving this motion. It is clear that he understands the importance of supporting our defence industry and, in turn, the preparedness and capability of our Defence Force. Our sovereign defence industry is an essential cog in the defence machine. Without the support of both small and medium enterprises on our home soil, our national security will be put at risk, and, with Labor's 2023-24 defence budget, that's exactly what they've done. The budget handed down in May clearly states:

… local acquisition spend is expected to decline …

This statement is then backed up by data which showcases a purposeful decline in local equipment and acquisition spend, followed by an increase in overseas spend. Why? Why are hard-earned taxpayer dollars of the Australian people not being invested back in the Australian businesses that support our Defence Force?

COVID-19 is a very clear example of why we should not heavily rely on imports of other industries. In the case of construction, many companies were left without materials to complete their builds. The effect of a complete supply cut-off could be catastrophic for the Defence Force. The defence minister authorising further—

Be louder! You know I'm going deaf! I can't hear you when you're interjecting. You've got to be louder for me, mate!

The defence minister authorising further spending abroad, to the detriment of our own enterprises, is very concerning. We have to learn from mistakes.

You need to know the difference between AIC and FMS. FMS is foreign military sales, and there is a time for that, when we look at helicopters and other defence industry—

Well, I'm happy to go carefully if you want! I think that it's important to highlight the political games that the member for Solomon obviously wants to keep interjecting about. The member for Solomon put out a press release which said:

Labor has committed to a Force Posture Review and I continue to call upon the Morrison Government to give a clear answer on the future basing and maintenance of … the Apache helicopters, which were rumoured to be moving from the Territory to Townsville.

This would cost Territory jobs, and the government still won't be straight with Territorians about what's going to happen with their livelihoods. The statement continued:

It's clear that the Liberal/National Coalition Federal Government does not recognise Darwin as the Defence Capital of Australia that it is. A Federal Labor Government will.

What happened to those Apaches? They're moving to Townsville! So the politics of a press release when in opposition is not the same as when they're in government.

The member for Solomon wants to throw all the toys out of the cot and create politics. Politics! That's all they do, because, now in government, I haven't seen the member for Solomon attack the now government.

Luke Howarth (Petrie, Liberal Party, Shadow Minister for Defence Industry) Share this | Link to this | Hansard source

Hear, hear! That's the point.

Phillip Thompson (Herbert, Liberal National Party, Shadow Assistant Minister for Defence) Share this | Link to this | Hansard source

They haven't taken any responsibility. What we're seeing is the member for Solomon playing more politics. We've seen it continually, and this press release highlights it. It's all politics; that's all it is. It's all politics. And that's why, when you're looking at FMS and AIC, you need to concentrate on both.

Alicia Payne (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

The member will cease interjecting!

Phillip Thompson (Herbert, Liberal National Party, Shadow Assistant Minister for Defence) Share this | Link to this | Hansard source

AIC is extremely important. The AIC process is extremely important, because through the LAND400 procurement process—which I think, and which many before have said, has been bungled—there will be AIC, and local businesses can benefit can benefit from this, local businesses in Townsville.

But going from 450 vehicles to 129 really puts our local SMEs out in the cold. Where the process is being delayed and delayed, the big players can stay there but the SMEs, the ones who are waiting on these contracts, cannot wait. So we're seeing people lose jobs. It's extremely important that defence procurement looks at locals. And we heard that at Land Forces, but there were no defence industry ministers or government members there. (Time expired)

Matt Burnell (Spence, Australian Labor Party) Share this | Link to this | Hansard source

I would like to thank the member for Petrie for moving a motion on defence industry and the capability of our sovereign defence industry. I also join with the member for Herbert in thanking all our defence personnel for their service.

Whether he intended this or not, the member for Petrie's motion gives our side of the chamber ample opportunity to play a bit of compare and contrast as to how we get from point A, a plan and an announcement, all the way through to point B, the delivery. I say this because I feel it would be unfair, inaccurate and counterproductive to say that those opposite do not want to see Australia's defence spending and sovereign capability growing to suit our national interest in the broad sense. But we can look at a few key facts, like the Morrison government alone having three defence ministers in three years. That includes, at the tail end of the Morrison government, having their very own Leader of the Opposition himself on job. Seeing how he ran Home Affairs, frankly, makes us duty bound to examine things with a fine-tooth comb. It makes us want to look under the hood at what is actually going on within that space a little more intently.

We are instantly talking about billions of dollars with our defence industry, and it's only fair to review the delivery of a project beyond that point A—the announcement—against how things are faring in the approach to point B. The beginning of this examination occurred with the commissioning of this government's Defence strategic review, co-authored by the Hon. Stephen Smith, a former defence minister who served in that role in both the Gillard and Rudd governments, and Sir Angus Houston, a man who needs little further explanation of his pedigree other than to point to his serving as Chief of the Defence Force until his retirement in 2011. But the handing down of the DSR was only the starting point, and the member for Petrie's motion somewhat alludes to the reason why.

For starters, there was the discovery that the Australian National Audit Office had identified major defence projects running years behind schedule and billions of dollars over budget, with 28 projects that are a total of 97 years behind schedule and 18 projects running over budget. At least $6.5 billion of variations from the initial approved budgets were identified. We saw battlefield airlifters that can't fly into battlefields. We saw patrol boats that were built with materials that are prone to rusting, which appears problematic even from a layperson's perspective. I may not have been in the navy, but from my days as a merchant seafarer I can tell you that this is quite an obvious flaw on most types of boats. Without listing the projects, we can understand why if one falls into any of those categories it might be described as a project of concern.

The Albanese Labor government understands that major defence projects are no small undertaking, requiring the hard work of personnel within the Department of Defence, the ADF and cutting-edge defence industry partners. This is by no means a simple task, but having a holistic view of our defence spend requires the government of the day, and ministers within the defence portfolio umbrella, to take an active role in monitoring projects to ensure this doesn't happen on a grand scale. It's easy to announce the spending of billions in defence as part of saying that defence spending has never been higher under a given government, but making sure that money has been spent wisely is just as critically important, albeit less flashy.

Labor understands the importance of having a strong defence industry operating within its borders. As the member for Spence, I'm particularly proud of the defence industry that is operating within the borders of my own electorate. Perfectly located in the vicinity are the RAAF Base Edinburgh and the Defence Science and Technology Group, in a location that is enviously connected to the Osborne Naval Shipyard, which is going to play a major role in the AUKUS build. Everyone from the defence primes to SME manufacturers knows that the future is bright in this space, with primes such as BAE Systems Australia, Saab Australia, Lockheed Martin, Raytheon, General Dynamics and Northrup Grumman operating in Spence, not to mention the building of Boeing's defence aircraft maintenance facility to support the P-8 Poseidon aircraft.

I have many fond memories of last year's Defence Industry Day held in my electorate of Spence. The Assistant Minister for Defence was kind enough to attend, give a keynote address and meet with members of the Edinburgh Industry Alliance on the day. I very much look forward to attending the next Defence Industry Day later this year. We've seen positive signs within the industry since the election of the Albanese Labor government and the handing down of the DSR. Those in the industry that know me well will know I will always be fighting for the defence industry, as it's an industry that has kept manufacturing alive in the northern suburbs of Adelaide.

Andrew Wallace (Fisher, Liberal National Party) Share this | Link to this | Hansard source

I rise in support of this motion that brought by the member for Petrie, who is the shadow defence industry minister. As a proud former government, when we were in government we as a team agreed to $210 billion worth of defence industry expenditure over 10 years. It's really interesting because, during the lead-up to the last election, when those opposite were in opposition, they said there was not a cigarette paper's difference between the then opposition and the then government. We now know that that is not correct, because those opposite say one thing when they're in opposition and do the exact opposite once they get the reins of power.

Anybody who is anybody in the defence industry world would know that the DSR, the Defence strategic review, which was recently announced, had a very significant chilling effect on defence industry in this country. The shadow minister and I had the privilege of attending an AIDN—Australian Industry & Defence Network—dinner just a couple of weeks ago. The speeches that came out of that night, at a Queensland level and also, earlier, a national level, showed absolute desperation among defence industry contractors. They are staring down the barrel of having to lay workers off because of the chilling effect that the DSR has had on defence industry. Everybody has basically downed tools in the Australian defence industry because of this government's indecision.

When we were in government, we made 'sovereign capability' a catchcry. I didn't even know what it was until I came into parliament, but sovereign capability is incredibly important. I want to single out the efforts of people like Christopher Pyne, our previous defence industry minister, who really led the charge back then, and also the member for Durack and, of course, the current opposition leader. The coalition government has always believed in the importance of the protection of this country.

The DSR acknowledged that previous reports into Defence acknowledged that there is no longer a 10-year strategic lead time for a kinetic war that could potentially happen in the Pacific. It acknowledged that those were the findings of previous reports, and it accepted them. Notwithstanding that, do you think that this government put an additional cent into Defence? Not only did they not put an additional cent into Defence but they've cut a billion and a half dollars from the defence budget. That takes me back to my cigarette paper analogy. Those opposite, when we were in government, claimed that there would not be a cigarette paper's difference between them and us. Really they say one thing and they mean another.

It is incredibly important for this country, not only for jobs but for the protection and defence of this nation, that we continue down the route of sovereign capability. Of course, in this country we don't have the manufacturing base to be able to make fighter jets and things like that, but there are a lot of things that we can do in this country, and there are a lot of things that we can provide to the supply chain even of things like the F-35. Whilst we may not make fighter jets or helicopters, we're great at building ships. We need to have that emphasis on sovereign capability in this country because—may it please God that this never happens—if this country were ever blockaded or there were a kinetic war on, we could not rely upon our just-in-time supply chains, as COVID has taught us. We need to make stuff here. To make stuff here, we've got to have the intellectual ability and experience to actually manufacture right here in Australia things that we rely on in conflict.

Alicia Payne (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

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

Sitting suspended from 13:18 to 16:00