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

Speculation is mounting that the government is about to bin the $1 billion Seasprite project. It is said that a decision will be made tomorrow or perhaps later this week. In reality, such a decision has been a fait accompli since May of last year. That is when Defence Minister Nelson grounded Australia’s fleet of Seasprites. He did so after years of project delays, so any decision by cabinet sometime this week will merely rubber-stamp the inevitable.

But how could the government get it so wrong? This is, again, another defence procurement project that has ended in failure. And taxpayers foot the bill of $1 billion, which could have been spent more profitably elsewhere. Again Minister Nelson’s threat to sue for failing to deliver on the project proves hollow, for the government itself negotiated away liquidated damages virtually upfront in this contract. Again the government failed to indemnify the taxpayer on a major defence procurement project—this time against a $1 billion loss. Now we are going to be asked to pay the tab on an extra $2 billion spend to replace the sprites. How did it come to this?

The government signed up for 11 Seasprite helicopters back in 1997. They are supposed to act as the eyes of our warships, the Anzac class frigates. Initial delivery was scheduled for 2001. After five years of delays, the Minister for Defence had finally had enough. In May last year he announced a review of the entire project. He grounded the Seasprites until further notice. That decision just delayed the inevitable, as we will probably find out tomorrow or later this week. It has also led to 11 months of wrangling between the government and the manufacturers. Again, the government came up with unrealistic demands for these ageing craft. It wanted a two-pilot craft that could fire two Penguin missiles. No other country has made that request and, indeed, such a configuration has not been tried before. But the manufacturers complied. Unsurprisingly, they ran into problems. There were difficulties with the critical integration of the electronics and the radar system, ITAS. This coordinates radar, navigation, communications and weapons. Since this was expected to be a shared platform, it is difficult to know whether the RAN or the RAAF had a final sign-off on the craft’s airworthiness certificate. Either way it has not happened.

Warning bells started tolling in February 2006. Senators were informed at estimates that the Seasprites were unable to fulfil the role for which they were acquired. They had failed certification testing. They did not meet Navy requirements. Alarmingly, senators were told that the Seasprites would not be fully operational until 2009, which means they are at least five years behind schedule. The CEO of the Defence Materiel Organisation, Dr Gumley, admitted that Defence would not buy equipment that way ever again. He admitted liquidated damages for the project were negotiated away for other benefits, but of course these other benefits have failed to materialise.

Finally the government appears on the verge of coming clean on this project and scrapping it altogether. Let us look at the consequences of that likely decision. It leaves Australia with millions of dollars worth of redundant Penguin missiles. These were bought especially for the Seasprites. They are not suited to operating helicopters such as the Seahawks. A touted replacement is said to be the MRH90—the all-round helicopter. These, by the way, cannot fire the Penguin missile. But there is another problem in the making here. Australia already has on order 12 MRH90s from French company Eurocopter. The first of these is supposed to be delivered later this year. I will be watching closely to see whether this is the case, because European orders for the MRH90’s sister craft, the NH90, are experiencing significant delays.

By the way, Eurocopter is also the company behind the controversial Tiger helicopter procurement purchase. That company is currently attempting to hold the government to ransom over its through-life support contract for the Tigers. It has put in an ambit claim for an extra $650 million for costs. We will have to wait and see whether the government chooses to pay up. Then there is the problem with training pilots. A knock-on effect of the extensive delays in the Seasprite project has been the inability to properly train junior aircrew at Nowra. The Seasprites were meant to be used to train pilots, but the government has had to spend another $24 million on a four-year lease on three other helicopters to do this job. It is yet another hidden cost of the government’s failed Seasprite procurement project.

But perhaps of greatest concern to the public with the binning of this key defence project is not the financial waste, as massive as that might be but the gap the government has admitted such a decision will leave in our defence capability. I quote from a question on notice supplied to the Senate last year.

... Defence remains cognisant that the alternative to termination or failure of this project will be a significant and enduring capability gap ...

In other words, this financial disaster could conceivably cost lives. It was supposedly purchased to provide our warships with surface surveillance, surface attack, an antisubmarine weapons carrier and winching and load-lifting operations. Our sturdy fleet of eight frigates provide air defence, antisubmarine warfare, surveillance, reconnaissance and interdiction. I quote from the government’s own website:

... Seasprite helicopters will be embarked to enhance anti-surface and surveillance capabilities.

We now know that is looking increasingly unlikely. This is the result of bad government policy—a government that spends a billion dollars on an ageing helicopter, fails to get the procurement process right and then leaves its Defence Force in the lurch, along with hapless taxpayers, of course.

I hope the government decides the fate of the Seasprites tomorrow. A decision is long overdue. It should act swiftly to end this mess, then turn its attention to truly servicing defence personnel with the best possible equipment, not using ageing craft such as the Seasprites, some of the frames of which date back to the Vietnam War, and trying to convert the carcasses into a state-of-the-art craft. It was never going to happen. It should never have been considered. I hope that tomorrow the government has the decency to decide the fate of the Seasprite, apologise to the nation for wasting $1 billion of taxpayers’ money and then set about finding a suitable craft for the Anzac frigates.