David Johnston (WA, Liberal Party, Minister for Defence) Share this | Hansard source

I thank Senator Xenophon. Some of the numbers that he has quoted are not entirely correct. When we came to government, the finance minister and I were confronted with advice that the air warfare destroyer program, a program that is very, very important to our national security, was in fact in serious trouble, notwithstanding two attempts during the life of the previous Labor government to reschedule it. The Auditor-General released a report earlier this year where he stated that there was about $300 million of cost overruns at that point and overall the project was then 21 months behind schedule. That is what we inherited.

We had also set the benchmark at 80 man-hours per tonne. The international benchmark is 60 man-hours per tonne for the construction of naval military ships. Currently the program is running at 150 man-hours per tonne. That is unsustainable and unacceptable, and we would be failing the taxpayer if Senator Cormann and I did not undertake some serious remedial action.

Senator Xenophon, I am sure you are aware that we took this action following an independent review to ensure we were setting the program on the right course because we want a sustainable, viable industry. There are potentially a further eight ships to follow, and we want to see them built in Australia. But we are not going to build them at any price. We scoped this program very carefully. Some of the industry players have performed well but some have not. So we are sending a very specific message that this is unacceptable but that we want the industry to recover.