Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Hansard source

I thank the minister for her detailed response and I'd like to place on the record a couple of points in response. Firstly, let me deal once again with Labor's record on shipbuilding. The minister asked what I had done during the period when Labor was in office. I was part of a government that kept our shipbuilding yards absolutely full. A number of yards that are currently closed were at full capacity. Williamstown in Victoria was at full capacity. A number of yards across the eastern shores of this country were full. That is absolutely the case, Minister.

While you can well point to your discovery of the importance of Australian shipbuilding very late in the piece—and we'll come to that in a moment—let me point to the specific repudiation that needs to be made again and again. The Labor Party is not about derailing a naval tender worth $35 billion, nor are we seeking to produce an outcome for a particular preferred bidder, whether that be any one of the three foreign limited invitees or, for that matter, one of the Australian shipyards—Austal or the ASC—or to endanger in any way Australia's national security. What I think needs to be understood here is that the government is seeking to wrap itself in the flag to avoid accountability for a failure of public administration. The government has once again fallen victim to a department that travels on its own merry way, establishing its objectives irrespective of what government wants and in a manner which we have seen time and time again throughout the history of this Commonwealth. What we're seeing here—and I think the evidence is mounting through the work of this Senate committee—is an extraordinary gap between what the government says it's doing and what actually happens. Frankly, an important role for this parliament is to appreciate the difference between the stated policy of the government and the actual administration.

In regard to the minister's proposition that the Senate asked for the disclosure of the bidders' particular commercial-in-confidence details, that's just not true. You're seeking to assert that proposition, but that is not what this return to order actually asked for. If the government thinks that, how are you going to be able to produce the capability documents later this year, which the public servants have said they will be able to produce? They can't tell us at the moment what the word 'sovereignty' actually means. They can't tell us what the policy objective actually says at this time, because the government hasn't signed off on it. However, they're enacting a series of policy decisions, which suggests to me that in their mind they have clear policy preferences.

I've outlined the approach that was taken through the committee process, but the need for a sovereign capability with regard to naval shipbuilding is absolutely critical. It goes to the issue of this country being able to not just design its own naval vessels but build them, sustain them and export them. To do that, we have to make sure we have the skills in this country across all of those areas. We have to be able to carry out those capabilities in the good times and the bad.

My concern with the documents the committee has actually seen is that the department seems to have a different view. The tragedy here is that the government signs off on those procurement documents. In particular, I'm anxious when I read where the tender documents say:

The successful Tenderer will not be directed to utilise any particular shipbuilding workforce or engage any particular provider of shipbuilding services. In particular, the Commonwealth is not mandating that the successful Tenderer use the workforce—

and I emphasise the word 'workforce'—

of ASC Shipbuilding Pty Ltd currently working on the AWD Program.

It says:

The Commonwealth has selected the Tenderers on the basis of their Reference Ship Designs and their ability to undertake both the design and build of the Ships. The Commonwealth's intention is that the successful Tenderer will (itself or through its Related Bodies Corporate) directly manage and supervise the workforce undertaking the shipbuilding work. The responsibility for build management and supervision should not be subcontracted in its entirety to a third party entity.

So the government is quite deliberately, quite prescriptively, making arrangements that have the effect of excluding Australian companies from that arrangement. But it's not just the bit about Australian companies. The use of that word 'workforce'—not 'company' but 'workforce'—suggests to me that the workers at those plants could rightfully be very concerned that it means them, the individual workers at that plant. So when the preferred tenderers make the statement that they'll employ everyone, you won't necessarily be able to have any confidence in that, because the statements in the documents themselves contradict that proposition.

On top of that, the documents also reveal that the Commonwealth has, at its discretion, the capability to change its mind at any time—at any time! It doesn't actually have to accept these words at any time. It can change its mind. You can have no confidence necessarily that these words have any great value, so therefore we must look to the words and the actions of the people that are actually administering the tender, and this is what really troubles me. What we heard is that Department of Defence's Deputy Secretary, Capability Acquisition and Sustainment Group, Mr Kim Gillis, personally phoned the three international tenderers to tell them to disregard Austal and ASC's teaming agreement and remind them that the arrangements that the government had entered into stood.

What was this teaming agreement? On 8 June 2017 Austal and ASC Shipbuilding announced an agreement for the purposes of building the future frigate program. In their joint statement, the two Australian shipyards indicated they would:

…act as one in support of the program, pooling their complementary strengths, skills and experience.

Austal's CEO, Mr David Singleton, further stated:

The Austal/ASC Shipbuilding teaming arrangement offers a compelling, low risk, Australian shipbuilding solution for each of the three shortlisted international designers.

He said:

This partnership will bring Austal's unparalleled record in aluminium shipbuilding, exports and operational efficiency to combine with ASC Shipbuilding's expertise in steel warship manufacturing.

ASC Shipbuilding's CEO, Mr Mark Lamarre, stated that the ASC/Austal teaming arrangement was:

… a powerful partnership that not only achieves the Government's objectives for a sovereign and sustainable shipbuilding capability in Australia, as set out in the recent Naval Shipbuilding Plan, but confirms to all those in the industry that there is a bright and successful future ahead.

That doesn't sound particularly radical. It doesn't sound particularly dangerous to our national security. In fact, what we were told at the Senate hearing—both by Mr Singleton and Mr Lamarre—was that there had been constructive and detailed negotiations with each of the three preferred tenderers up until the point that the tender documents were provided by the Department of Defence. Then those discussions were closed down. Stopped—stopped dead!

And I think we are entitled to know why, certainly in relation to the question I asked.

First of all we asked: 'Did Mr Gillis make this unsolicited call?' The answer from the deputy secretary of the department was yes. What was said? We couldn't speculate on what was said exactly, but it was clear in the minds of the committee members from the evidence put to them that there had been a substantial change in the response from the three international tenderers to the Australian shipyards prior to this event, the phone call and afterwards. But it doesn't end there, because there was a further matter confirmed to us. A two-week extension was provided to the three international preferred bidders and no explanation given—not even requested. We were told, yes, the explanation was perhaps as a result of the disruption in the industry caused by the extraordinarily radical statement by ASC and Austal. The disruption, I think, is this: the defence department's plans had come unstuck. The government may well be pursuing one policy but the department is pursuing another. We're entitled to know what the consequence of that is.

I ask a simple question. Minister, you have before you questions from that hearing. Is there anything technically wrong with actually asking the bidders to provide additional information as to why they couldn't include involvement with the Australian shipyards? Further, would there be any delay in the process? We will wait for your answer. That's a technical question that's got nothing to do with national security. You won't be able to wrap yourself in the flag over that one. It's a simple matter. Is there a capability there or not? Is it going to be squandered? You might ask yourself and you might ask your colleague there, Senator Cormann, what you are doing to that asset in Adelaide—an asset that you are driving into the ground. We know what happens in 2019. That shipbuilding asset, ASC Shipbuilding, has no orders on the books come 2019. Its single value is the workers on the books. The only question will be how much you have to pay out in redundancies, and I will want to know the answer to that.

We know what the consequences are. We know that there will be hundreds of job losses coming through the system at ASC over the coming period. We know that ASC will be shedding 250 jobs by Christmas. We know that there will be 500 more by the end of June next year. We're entitled to know, Minister, what you are doing about it. After all, aren't you the senior minister in this outfit? Aren't you the senior minister who is supposed to get all this under control? Or are you just there to do the bidding of Minister Pyne—who is responsible not for a naval shipbuilding program but for a national marginal streets campaign for the Liberal Party? That is what is happening here now. We're not getting a national naval shipbuilding program; we're getting a government preoccupied with its own survival. So you may try to wrap yourself in the flag, but you're not dealing with the fundamental questions here about the consequences of a policy process which you have lost control of. You have fundamentally lost control of it.

I want to know why it is that suddenly the government got so interested in naval shipbuilding. Did it have anything to do with the destruction of the automotive industry? Remember, the automotive industry that this federal government decided to drive out of this country? Remember, it cost us too much? We couldn't possibly sustain an automotive industry in this country. We couldn't possibly sustain the hundreds of thousands of jobs in the automotive industry. It cost us too much. But now we're prepared to spend $90 billion on a national shipbuilding program.

When will we cut steel for that? It will be 2022 for the first; that's the submarines. When will we do that? That'll be real good for the auto workers—won't it? They'll have to wait around for several years, hoping that there might be a job. But they won't get one at the ASC, will they? The ASC will be driven into the ground as well. Ask your colleague, the shareholder minister: what are you doing about the value of ASC? How do you deliberately rundown the value of the ASC and treat it in such a manner?

There is a simple matter here. Is the member for Sturt there to service the building of our national shipbuilding capability, or is he there to service the Liberal Party's short-term political objectives? We know they're terrified of losing seats in South Australia. It's a hell of a price to pay, though, in terms of our national security to play those sorts of games. It's a hell of a price to pay for the lives of auto workers and their families. It's a hell of a price to pay for the lives of workers and their families in the shipbuilding industry in South Australia. But it isn't limited to that.

What about the workers and their families at Austal in Western Australia; not to mention what's happened at the shipyard in Victoria or what's happened in Newcastle? This is a government that has a very limited view of the capabilities of Australian industry—incredibly out of date. We have the situation where Austal has the capacity to build vessels for navies all around the world. It can build them competitively, without subsidies and on time and on cost. It is a highly effective operation. But it doesn't seem to be good enough to build for the Australian Navy. It can build them for the American navy, but it can't build for the Australian Navy. How is that? How do you account for that? We don't have to mandate anything; we just have to ask a simple question: how does that situation arise?

We have the situation where a former minister in this government stood in this place and said, 'We can't be trusted to build a canoe' and then they wonder why hundreds of jobs are flushed into the harbour. How is it that this government chooses to sign off on documents which are now before the Senate committee, where it appears that Australian companies are being treated with such contempt? Why is it that this government relies on such outdated notions of what we are capable of? Why is it that this minister wants to try to pull the wool over our eyes and suggest that we are somehow breaching national security to ask questions like this? That's the issue that's before us. What we have is a government that is preoccupied with its own security; a Prime Minister preoccupied with his own tenure in office—preoccupied over whether or not he'll be able to get through to the next election and stay in office.

The Senate committee will need to meet again. We will need to ask Mr Gillis why he made those calls. I'm sure he'll be looking forward to having a talk to us about that! We'll need to understand why the extension of time was provided. Remember, there is such an urgency about these matters. I think we'll need to understand why it is that Australian companies have been treated so shabbily. Why is it that good discussions were being held between ASC and Austal right up until the point that the documents were made available and suddenly closed? Why is it that this shoddy, shameful behaviour has gone on for so long? There is a deep mystery here, Minister, and I believe the Senate's entitled to pursue it.

We want to know why it is that this government has treated Australian manufacturers in such a shameful and contemptuous manner. Whether you like it or not, Minister, we will be pursuing those matters. Whether your government finds it embarrassing will not change the fact that this has nothing to do with national security and everything to do with the government's political security. Frankly, that's not an excuse that washes within this chamber. Thank you.