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

In today’s matters of public interest discussion I want to make a contribution on the proposed purchase by the government of 24 Super Hornet jet fighters at a price, we are told, approximating $6 billion. It is fair to say right at the outset that this decision has been made to plug an apparent air capability gap. That gap has never been seriously argued by government. It has been asserted, from time to time, by various commentators in the public domain and it has been asserted by the minister, but it has never been seriously argued and there has been little public documentation that would lend credence to the argument that we are approaching an air capability gap, apart from the fact that it is apparently current government intent to retire the fleet of F111 fighters some time around 2010. If they were not replaced that would logically lead to an air capability gap.

Today I would like to go behind some of the material that has been put in the public domain and perhaps address the few known facts in this debate, the real arguments and the real story—that is, how the government proposes to spend in the order of $6 billion of taxpayers’ money in purchasing these 24 Super Hornet jet fighters to plug a gap that we believe does not really exist.

As a matter of logic, it is almost impossible to prove or disprove the validity of such a gap and the best fix for it. I say that because the government, via Minister Nelson’s public announcements in recent weeks, has in that process chosen to ignore its own guidelines that provide the way major platforms are purchased in this country. Because that information has not been made public, because that process has not been followed, because it has not been peer reviewed and because it has not been to the appropriate committees of government, taxpayers are unlikely to know whether that money proposed to be spent is indeed going to be wisely spent—nor will they know whether there was a better fix for such a gap, which apparently several months ago did not exist at all.

The story begins on 6 March. The defence minister, Minister Nelson, announced a decision, we presume on behalf of government, to purchase the Super Hornets. It came with a price tag, he advised us, of some $6 billion. His decision, according to his own media release, was to:

... ensure the transition to the F-35 Joint Strike Fighter over the next decade.

In other words, as I said, it was to plug this forthcoming alleged air capability gap. That gap exists because of a decision to retire the F111s in the year 2010 and because their replacement, the JSFs, will not start coming online until 2013 and progressively thereafter. Hence the gap will exist for a minimum of three years and possibly four or five years—until there is a sufficient quantum of the new JSFs in stock.

But officials have been advising the government that there are other options for filling this supposed gap. One of those options—and you would think it was the most basic, which would have required some examination—includes extending the life of the current fleet of F111s. This is supported by facts drawn from a recently published ANAO report Management of air combat fleet in-service support. That report was published last month and it looks at the support, maintenance and refurbishment of Australia’s air combat fleet. That fleet comprises 26 F111s, 66 Hornets and 33 Hawks. The report is one of the few times ANAO has actually praised the Defence Materiel Organisation for largely getting it right. That report speaks glowingly of the in-service support, structural integrity management and line coordination between purchase and maintenance agents for the F111s.

For example, the audit found the satisfaction rate for supply of repairable items and breakdown spares exceeds 90 per cent, an extraordinarily high figure; aircraft availability of the Hawk exceeds the minimum stipulated under the contract; the spares supply chain for the F111s remains 10 per cent above the target rate of 85 per cent; and the structural integrity of the fleet, in the words of ANAO, is ‘well managed’. Its conclusions were that the DMO, the Air Combat Group and the Directorate General Technical Airworthiness are effectively managing the air combat fleet’s in-service support.

With such excellent maintenance and management of the F111s, and the utility of the workforce and skills that have been developed over the last five years as that entire program has been refurbished, the obvious question to ask is: can we extend the life of these craft for an extra four or five years to close the alleged air capability gap? The answer, drawing from that ANAO report, appears to be yes. Indeed, this is backed up by an RAAF report detailed within the report by ANAO. This study, the RAAF report, concludes:

The F-111 fleet’s life could be cost-effectively extended to 2020 ... and furthermore, the planned withdrawal date of 2020 would represent the best return on the F-111 capability investment.

In this context it is worth noting the government has already spent some $2.9 billion upgrading the Hornets and $635 million upgrading the F111s. That is nearly $4 billion, on top of the proposed $6 billion to buy the Super Hornets. Let me further recap. The government’s own 2000 defence white paper said:

The F-111 fleet is expected to leave service between 2015 and 2020 ...

Also, the Chief of the Defence Force, Air Chief Marshal Houston, indirectly referred to this retirement of the F111s in 2004 when he talked about:

The further upgrading of our current platforms for service well beyond 2020 ...

From this brief recitation of extracts from a number of reports, we know the F111 is capable of extending its life until 2020.

Now let’s look at the introduction of the JSF. Just last month, Defence officials assured senators at estimates the JSF program was continuing ‘on track’. Officials also told senators last November in estimates:

There are no indications that the Joint Strike Fighter program is blowing out.

And they went on to say:

... if the JSF were to slide substantially ... the purchase of a bridging fighter would be the last resort. There are strategies before we would get to that level of possibly extending the F111 and looking to upgrade more centre barrels on the FA18 hornets.

Here Defence is backing up the argument I am putting here today: extend the life of the F111s and upgrade the Hornets before buying the bridging fighter, also known as the Super Hornet. Such a purchase, according to those reports, should be a last resort.

This brings us to the second part of the story—the other side of the argument—the procurement process behind this ad hoc decision to purchase the Super Hornets. The Defence capability manual 2006 provides for three phases for procurement programs: a needs phase, a requirements phase and an acquisitions phase. Other key Defence procurement projects have taken months, even years, to complete. One only has to look at the intensity of work involved in the procurement projects for the AWDs and the LHDs to know that the needs, requirements and acquisitions phases are taking many years and involving hundreds of officials putting together a package of material before final recommendations go to cabinet.

But the approval phase for this bridging fighter, the Super Hornet, took only a matter of weeks. There was no competitive process—no competitive tendering at all. Government advises the risks and costs associated with the acquisition of the Super Hornets have been evaluated through the letter of offer and acceptance for the Hornets from the United States government. In other words: ‘The seller says that it is fine, so proceed with the purchase. Do not do your own needs analysis; do not do your own acquisition analysis; do not do any of the routine work that normally accompanies multi-billion dollar outlays.’ Because that work has not been done, by definition the taxpayer has no yardstick to measure value for money for its outlay of some $6 billion in the next two or three years.

We know that the Super Hornets are an off-the-shelf product. There is nothing wrong with that. The last time government fast-tracked an off-the-shelf Defence procurement project it was for the Tiger armed reconnaissance helicopter. That purchase, again because of inadequate preparatory work, now looks to cost taxpayers an extra $650 million on top of the accepted $1.58 billion price tag. We believe and assert that taxpayers need greater accountability and transparency in major Defence procurement projects like the ones under discussion today. They need to be assured and they have a right to be satisfied that government is not simply throwing good money after bad. I must say that that does appear to be the case with the purchase of the Super Hornets, for the simple reason that the usual amount of investigation, analysis and conclusions have not been put out for public discussion in interested communities.

The government spent nearly $4 billion upgrading its fleet of F111 Hornets and Hawks. Then it created an air capability gap which it seeks to plug with a further $6 billion for 24 Super Hornets. We say that this business of on-the-run policy decisions involving billions of dollars needs to stop. If the government changes later this year, Labor will ensure that that process stops and accountability becomes the norm. The government needs to follow its own rules and listen to its own officials in procurement projects such as the Super Hornet project.