Nick Xenophon (SA, Independent) Share this | Hansard source

I know a thing or two about stunts, but I regard this as a very important issue. The fact is, prior to the last election, the government in opposition made an unequivocal commitment to build submarines in South Australia. On 8 May 2013, the then shadow defence minister Senator David Johnston said during a visit to Adelaide, 'We will deliver those submarines from right here at ASC in South Australia.' Why ASC South Australia? There is only one place that has all of the expertise that is necessary to complete one of the most complex, difficult and costly capital works projects that Australia can undertake, and it is ASC in Adelaide. He went on to say:

The Coalition today is committed to building 12 new submarines here in Adelaide. We will get that task done, and it is a really important task, not just for the Navy but for the nation.

And we are going to see the project through, and put it very close after force protection, as our number priority if we win the next federal election.

Senator Birmingham did make some valid criticisms of the former government in terms of not advancing the issue of submarines more expeditiously. I think that is a valid issue. But Senator Birmingham also said—and as a fellow South Australian senator he understands the importance of this project, its strategic importance and its economic importance to the people of South Australia, and indeed the nation—that we need to have appropriate processes and good processes.

I have been part of the naval shipbuilding inquiry. I heard the evidence a number of weeks ago from Dr John White, a man who was retained by this government because of his credibility in terms of preparing the Winter White report—with Don Winter, a former US secretary of the navy—on the AWD program, the problems with that program and what needs to be done to fix that program.

Dr John White is a man who is held in high esteem by the coalition, in my view because it was Dr White who was responsible for fixing up the mess of the Anzac frigate program—taking that project over and bringing it in on time and on budget. In fact, it might have been under time and under budget. That is the turnaround that he achieved. We need to listen to him. The evidence that he gave to an inquiry of the Senate economics committee was very clear. He said that we do have time, if we get on our skates immediately and ensure that there is a competitive project definition study so that we can use the best of the best. We can get the best expertise, the best ideas from around the world, in order to build a submarine, and it ought to be built right here in Australia. Abandoning a competitive process, abandoning that due process that Dr White has recommended, would be both a strategic and economic disaster for our nation. So there are issues that we need to consider.

I agree with Senator Birmingham. We need to have due process. That due process appears to have been abandoned, judging by the remarks made by the Treasurer, the Hon. Mr Hockey, earlier today on the Fran Kelly program on Radio National, where he said that there will not be an open tender. It appears that there will not be any tender and that the deal has been done. There is an argument that the government has been effectively backfilling as a result of what appears to be an arrangement, an agreement, a process, that will guarantee that the subs will be built in Japan. I think that that is not the way that we need to go forward.

This is an inelegant mechanism—this amendment to this bill—but I think it indicates the importance of this issue to not just South Australia but the nation. If we end up exporting the manufacture of our subs to another country, effectively we will see something like $20 billion-plus of jobs being exported overseas. We are seeing a situation where we will ignore the ongoing economic benefits, the multiplier effect, of having the subs built here, let alone the issue of skills being retained here.

There is no reason why we cannot have the best design, even an overseas design. Those designers can be part of the project here in Australia. TKMS, the German submarine builder, which has a credible record of building submarines overseas, on time and on budget, has said as much. Indeed, in Greece, as troubled as that economy has been, it has managed to build subs, while dealing with communist unions. It built the subs on time and on budget. So I think that indicates its expertise. And there are other submarine makers that have an expertise in relation to that.

We need to listen to the experts. We need to listen to Dr John White. We need to ensure that the submarines are built in our nation. In terms of the economic benefit, we know that, for every dollar spent here locally, there are significant flow-on economic benefits. We know, from the Royal United Services Institution of the United Kingdom, that, for every pound spent on defence procurement in that country, 37 per cent goes back into general revenue. Obviously the figure would be different here, because of different taxation arrangements and the like, but there is a significant economic impact in respect of that.

It is also the issue of the promise. One of the reasons why I think people are so disillusioned with all of us as politicians is that, if you break a promise as fundamental as this, it just chips away at the credibility of those that break the promise and it affects all of us as politicians. I re-read a piece by Hugh Mackay from 1 August 1998. He is a social researcher, psychologist and writer. He made the point:

With trust in the political process being eroded with every bent principle, every broken promise and every policy backflip, the level of cynicism has reached breaking point for many Australians.

That was back in 1998, during the time of the GST debate. But John Howard, to his absolute credit, had the courage, had the tremendous political will, to argue an election on an unpopular measure, namely the GST. He got through, and, for that, I think John Howard needs to be acknowledged as one of the great prime ministers of this nation—for pushing through a change, a reform, and going to the electorate to seek that mandate. For that, I have enormous regard for John Howard.

Breaking this promise on submarines is not the way that the government should operate. If they believe that the ASC is not up to the task, which contradicts what was said by the Minister for Defence as shadow defence minister, back in May 2013, then they need to look at the structure of the ASC. I do not necessarily accept those arguments, but, as the owner of the ASC, the government have the wherewithal to fix any problems with the ASC. We need to do this as a nation. As inelegant, clumsy and messy as this mechanism is, I am obliged, on behalf of my constituents in South Australia, to support this measure. If we do not build the submarines in South Australia, if we do not build them in Australia, because of the flow-on benefits to other states, then we are making a massive strategic and economic mistake.