Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is to Senator Minchin, in his capacity as the Minister for Finance and Administration. I refer the minister to the Defence budget statements which say that the acquisition of six airborne early warning and control aircraft will not be finished until 2010, four years late. I also refer the minister to Senator Campbell’s failure to answer my question of 4 December last year on whether Defence would come good on Minister Nelson’s threat of 29 June 2006 to pursue damages if the project was two years late. Can the minister confirm advice from the Audit Office that the CEOs of Commonwealth agencies have a legal obligation under the Financial Management and Accountability Act to pursue damages if agreed deadlines are not met? As the minister responsible for that act, and given that this project is now four years late, can the minister explain what action he is taking to ensure that Defence complies with its obligations under the law?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I have no doubts about the defence department’s proper role and accord with the financial requirements that it has under the FMA Act, and I applaud Defence on the way it has managed its affairs under former secretary Ric Smith and under its new secretary in, as I have said, the face of enormous demands on the defence department particularly since September 11, 2001 and with the particular regional responsibilities that we have undertaken in East Timor, the Solomon Islands, Fiji, Iraq and Afghanistan. It has been a remarkable performance by the defence department in the face of those particular pressures.

In relation to the particular project, the project with Boeing for the early warning aircraft, I do not have a particular brief on that with me. As I have said, that particular question would be better directed to the Minister representing the Minister for Defence. But my recollection is that the Minister for Defence was widely reported as meeting with Boeing in the United States relatively recently to make clear his profound disappointment at the fact that Boeing was apparently unable to meet the time lines with respect to that very important project, and is pursuing Boeing relentlessly to ensure that we receive those aircraft as soon as possible. There do seem to be issues associated at the Boeing end with respect to that project.

This is an important acquisition made possible by the fact that we have brought to this budget some discipline which was sadly lacking during the 13 years of the Hawke and Keating Labor governments, when they completely lost control of expenditure, budgets blew out, and we had deficits and red ink everywhere and an incapacity to properly equip the defence department to defend and secure this country. Under our government, with proper discipline brought to the budget, we have been able to ensure that Defence has built a three per cent real growth per annum into the defence budget to ensure that it can make the acquisitions necessary to ensure the defence and security of this country. If we had a continuation of the approach pursued for so long by the Hawke and Keating governments, these sorts of acquisitions either would have been impossible or would have put the nation even further into hock, as was the practice of the Hawke and Keating governments.

Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Minister, haven’t taxpayers spent $2½ billion on the airborne early warning and control project? Aren’t they entitled to expect their finance minister to protect their financial interests by demanding that there be real consequences if contract requirements to deliver multibillion-dollar projects on time and on budget are not met? Isn’t that part of your job?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

My job as part of the NSC is to make sure that Defence properly contracts with suppliers for items and materiel which the National Security Committee agrees should be acquired by Defence. The management of those particular contracts is then a matter for the defence department, under the overall auspices of the FMA. Where suppliers fail to meet their contractual requirements, particular contracts will have penalty clauses attached to them. It is a matter for the defence department to pursue the relevant penalty clauses if there are breaches of contract by suppliers, and I have no doubt that the defence department will be doing that, as required.