Mark Bishop (WA, Australian Labor Party) Share this | Hansard source

I rise in this matters of public interest discussion to make a few comments about a recent report of the Australian National Audit Office relating to the purchase, chartering and modification of a new fleet oiler. The report was released, as I recall, in late January or early February this year. This report examines the government’s Westralia replacement program. As we will all recall, the Westralia was a tanker supply vessel that suffered a fire in the engine room in 1998 in which four people were unfortunately killed. The overall audit report into the procurement of Westralia’s replacement, the HMAS Sirius, is positive, and that needs to be stated up-front. Defence, of course, was quite pleased to heavily publicise the generally favourable report of the National Audit Office under the headline ‘A Defence procurement project that has come in under budget and on time’.

Once one goes behind the press release from the Department of Defence, one finds that that is not the complete story, and hence the audit report is worthy of reading and analysis. The main concern the Audit Office had was the delayed time frame in finalising HMAS Sirius’s safety case report, which would have caught the Audit Office’s attention because it directly linked back to the unfortunate accident that occurred in the predecessor vessel. That would have meant that the purchase and modification of this ship, one presumes, would have had a lot of attention paid to safety aspects. As the ANAO commented in passing, at paragraph 4.22, this is ‘an important element of the ... safety baseline against which contract deliverables should be tested’. In terms of contract compliance, the ANAO, properly in my view, had regard to the safety case and the safety case report as key indicators.

The Defence Materiel Organisation required this report to be delivered by October of 2005; yet in January of 2006, when the auditor asked to access the report as part of its preparation for this document, it was told by the DMO that the report at that stage was still in draft form. Amazingly, at the release of the ANAO report earlier this month, a comprehensive safety case had still not been delivered. This prompted the following rebuke from the ANAO, which is at paragraph 4.27:

It is clearly desirable, from a risk management perspective, that Safety Cases ... are finalised prior to the contractual acceptance ... by DMO so that system hazards have been adequately identified and the exposures managed ...

We need to remember that this vessel is the replacement for HMAS Westralia, which suffered a fatal fire in which four sailors were killed back in 1998. That tragedy has been described as Australia’s worst peacetime naval disaster since the 1964 Voyager incident. That fire was caused by the rupture of a flexible fuel return line, and I would have presumed that the lesson for the government from that tragedy was that ensuring the safety of Navy personnel in replacement vessels and in all other vessels is paramount, and there is no reason to suggest or imply otherwise.

Yet there has been substantial delay in compiling the safety case report for Westralia’s replacement, the HMAS Sirius. Even by August 2006, for example, a number of safety tests and trials had not been completed. These included the sprinkler piping pressure test, the system operational test and the deck fire-fighting foam test. Those details are reported at table 4.3 in the ANAO report. More important than that, there was no first aid equipment evident and no escape signs, and test tallies for fuel, hydraulic and flexible hoses were missing. That is a whole 10 months after the DMO required such a report from the prime contractor.

At the conclusion of the ANAO report, it states that Defence advised that the whole ship safety case report would be finalised by this month. One makes the point in passing that, having given that assurance to the ANAO, one hopes that that assurance is complied with, because this vessel is expected to be granted full operational release by June of this year. With a bit of luck, we will get the final safety case report by some time in March or April of this year and final clearance for delivery to Navy in June of this year.

ANAO also raised a number of other concerns about the procurement and chartering of HMAS Sirius. These related to the leasing of the vessel and the need for a ship that was faster than the ageing Westralia, but Navy ended up buying a ship that was slower. Here are the facts. The need to replace the Westralia was first identified in the Defence white paper in the year 2000. Government decided to buy a commercial tanker, the Delos, and convert it for Navy service—there is nothing wrong with that. But, as mentioned, the reason for replacing the Westralia was that vessel’s slow cruising speed. It had a maximum speed of 16 knots and thus it was unable to integrate with any task group which needed vessels with a speed of at least 18 knots, as the ANAO has identified.

Amazingly, Westralia’s replacement, HMAS Sirius, is slower. The Delos’s maximum speed is going to be, we are informed by the ANAO, somewhere between 15 and 16 knots. The government’s defence for not meeting this requirement relates to a compromise on the issue of cost. One presumes that they had the full information and hence made that trade-off. But we simply note in passing that one of the reasons for acquiring a new vessel was to have a high-speed vessel that could be integrated with a task force, and the government has chosen, essentially, to trade off speed for cost.

The cost of the Delos, subsequently renamed the Sirius, was well within budget. The total cost of the project was $118.7 million, well within an anticipated total project cost of something in the order of $143 million.