Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I present the report of the Economics References Committee, The future of Australia's naval shipbuilding industry: tender process for the navy's new supply ships (part 1), together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

I rise to speak on the Economics Reference Committee report, The future of Australia's naval shipbuilding industry: tender process for the navy's new supply ships (part 1)and, in doing so, I want to raise a series of issues that have been identified as part of this committee process.

I want to start by saying that this is only the first part of what is going to be a much larger inquiry into the future of Australia's naval shipbuilding industry. This is a small component of what is going to be a much bigger inquiry into not only what has been an improper and wrongly conducted tender process but also what is going to be the future of the Australian shipbuilding industry, which has economic, national security and job ramifications.

This inquiry highlights the government's failure to support Australian jobs and Australian industry in the Australian shipbuilding industry. The report is a damning report on this government. It shows the contempt that that coalition has for Australian workers and the Australian manufacturing industry. We have seen it with Holden, we have seen it with Toyota and now we are seeing it with Australian shipbuilders. The Minister for Defence's announcement to offshore the build of two Navy supply ships to Korea or Spain was a kick in the guts to Australian shipbuilders—shipbuilders who are already facing an uncertain future, while the defence minister fails to address the valley of death; shipbuilders who are watching the defence minister fail to keep his promise to build the Navy's future submarines here in Australia; and shipbuilders who are seeing a defence minister offshore Australia's strategically vital shipbuilding industry.

I would like to remind the Senate that soon after making this announcement the minister said, 'The construction of these vessels is simply beyond the Australian industry.' Let me say that again. The minister himself said, 'The construction of these vessels is simply beyond the Australian industry.' This is plainly not true. As we heard from stakeholders at the hearing in July, Australian companies are willing and able to work right here in Australia. We have also heard Australian shipbuilders have the skills and capacity to build these ships right here in Australia. Three companies from across Australia have said in their submissions that the ships can be built here in Australia. Peak bodies, state governments and the workers' representatives say the same thing.

My issue is not simply that an Australian company is not going to be awarded the contract; my issues is that a process has been determined that does not allow them to participate and tender in the process. Frankly, this should be an open, clear, transparent process. Where there is an argument on different sides about whether or not Australian companies have the ability to produce these ships, that is fine. That is why we have tender processes. That is why we allow companies to come and compete, to present their case and put forward their plan and ensure the best plan succeeds. Frankly, the emphasis should be on how we can create opportunities for Australian companies to be able to compete—not on how we can find a way to exclude Australian companies.

I know there are those—and there are those from DMO and others—who hold the view that Australian companies are not capable of this build. That is fine. They are entitled to their view. But that is why we have a tender process in which Australian companies should be allowed to participate. That is why we allow these things to get tested. The decision by this government to exclude Australian companies from even being able to present their case and to compete is, frankly, nothing more than a kick in the guts.

This is a government that is not listening. This is a government that is hell-bent on offshoring the shipbuilding industry. Excluding Australian shipbuilders from tendering to build Australia's supply ships is a disgraceful decision that will directly result in Australian jobs being exported overseas—and all of this despite the minister himself saying last year, before the election, 'I get really fired up when I find us giving away our manufacturing base in the defence space to foreign manufacturers. It is just not on.' Well, rather than getting fired up that Australian jobs are being sent to foreign manufacturers, this minister has put up the white flag.

It is clear that only Labor supports Australia's strategically vital shipbuilding industry. The plan that we took to the last election would have brought forward the build of these two ships and strengthened Australia's shipbuilding industry. It would have supported jobs, training and advanced manufacturing in this industry. There are those opposite who said one thing before the election and are now doing something very different. It is time that Australia had a defence minister and a government that will stand up for our strategically vital shipbuilding industry—not a defence minister and a government that are prepared to see thousands of Australian jobs go overseas.

This inquiry will produce a much larger report. There will be site visits. We are going to go out there and talk to the workers, talk to the manufacturers and talk to the industry. But this first report clearly indicates that the tender that is being investigated as part of this process should have initially been open to Australian firms. Frankly, the government should go back to the drawing board, reopen the tender process, allow Australian firms to compete and allow the different debate. The debate that was had in the committee was: are Australian companies capable of this build? That debate should be conducted through the tender process. The companies should be allowed to present their case. They should be allowed to bid. It makes no sense—there is no logic of reason—to exclude Australian companies and Australian workers from being able to compete for Australia's own shipbuilding industry.

We all know the issues of the valley of death. We all know the issues that are facing the shipbuilding industry. We all know that this, compounded with the submarines and other issues that are heading towards the shipbuilding industry have the potential of resulting in the loss of thousands of jobs and that these kinds of builds need to happen when they can happen in Australia. This government made a decision to exclude Australian firms and to simply limit it to two providers, a Spanish firm and a Korean firm, and not allow the Australian firms to even participate—if for no reason other than to at least create more competitive tension. The more companies that tender, the more companies that bid, the more companies that are prepared to put forward their case, the better it will be in terms of driving down the price and creating a competitive environment. This is not the way this process should have been conducted. There needed to be a greater level of transparency, a greater level of openness and frankly a greater level of emphasis on protecting Australian jobs. In this instance the government has failed. We will continue to proceed with this inquiry.

I want to thank Senator Edwards and those in the coalition for their participation in the preliminary part of the inquiry. I think we are going to have a very frank and open debate. There will be a series of different views. That is a healthy demonstration of how the Standing Committee on Economics has been working and will continue to work, where, while there are differences of opinion, there is a level of respect and congeniality which has been a hallmark of this committee—a committee that I am proud to now be chairing. I also want to thank the secretariat of the economics committee, Kathleen and her team, for their incredible work, the tireless advocacy and the work that they do on behalf of the committee. It has been a real honour and privilege to be working with them. I seek leave to continue my remarks.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

I also rise to speak on the tabling of The future of Australia's naval shipbuilding industry: tender process for the navy's new supply ships (part 1). I also acknowledge Senator Dastyari's comments about the hard-working secretariat, who has prepared this, and also the collegiate nature in which it is being prepared. I have provided a dissenting report to this report because the executive summary of the report that has been tabled bears little resemblance to the evidence which was collected during that July hearing. Therefore, I am protesting the evidence which has been tabled. As the deputy chair of this committee, the nature of shipbuilding is, and has been, a very important issue for a very long time. While we are very collegiate, it somewhat smacks of hypocrisy and is somewhat shrill now for those on the Labor side, and indeed the Greens, to be concerning themselves when they have not been concerned for quite some time.

I must remind anybody who is listening to this contribution that Labor were in government from November 2007 to September 2013—not 12 months ago. It is as if there is no reference to this period of time when the Labor government was in place. I must give some reminder of the commitment that the Labor Party gave. I refer back to the 20 August 2007 when the then opposition leader, Mr Kevin Rudd, indicated that the Labor government would ensure that the submarines are built by the ASC at its Port Adelaide site, and that construction would begin in about 2017—about the time work on the $6 billion Air Warfare Destroyer project in Adelaide would be tapering off. I quote the former member Mr Rudd who went on to become Prime Minister:

Starting the process this year we will guarantee continuity of work for South Australia's defence industry and those employed in the sector. It will also provide a big boost to South Australia's growing knowledge and skills base and its reputation as the defence state.

What hollow words they were. You might laugh Senator Cameron with your picket line rhetoric. It really does amaze me that you deny your term in office. As the Minister for Defence quite rightly said during question time, when it came to the box of submarine folders, budgets and money, when he took his ministry and opened the submarine box, there was nothing there, despite all this rhetoric. I quote the words of Martin Hamilton-Smith, the state Minister for Defence Industries of the Labor Weatherill government:

On 21st January 2010, former Prime Minister Kevin Rudd promised without reservation that the next generation of submarines would be built completely in South Australia.

He then went on to say:

Before he was knifed by the faceless men, Rudd said, 'As Prime Minister of Australia I confirm in absolutely clear cut terms that our next generation of subs will be built here in Adelaide.'

What happened? I quote here the state minister:

… but since then Julia Gillard—

the then Prime Minister—you have to be careful because there was such a flip-flop—

… has cut $5.45 billion from defence spending and according to the Australian Strategic Policy Institute’s (ASPI) budget director Mark Thompson has deferred a further $17 billion of defence projects.

This was in March 2013. How prophetic was that? You cut every part of that budget to the point where there was the lowest expenditure and you are sitting here feigning this outrage.

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Edwards, I ask you to refrain from using the word 'you' and direct your comments through the chair.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

The senators on the other side are feigning outrage or confected outrage. It is as if they have airbrushed those six years of budget delinquency out of their history. Now, 11 months later we are still trying to fix the mess that you left, and today we have in the media, the South Australian Premier Jay Weatherill saying:

The reason we won that contract is because we had powerful voices in the federal Cabinet, like Nick Minchin, Robert Hill, Amanda Vanstone and Alexander Downer, who stood up and advocated for SA.

He said that this afternoon, but he never mentioned, not once, the powerful voices that were there for six years—a critical time given the valley of death was approaching. He never mentioned Senator Wong, Senator McEwen, Senator Gallacher or the most chivalrous Senator Farrell, who graciously stood aside for Senator Wong, nor did he ever mention their coalition partners, Senator Sarah Hanson-Young or Senator Wright. He did not mention anyone from the other house—Mr Butler, Ms Rishworth, Mr Champion, Mr Zappia or Ms Ellis. Why? Because they do not exist. During the six years they were in government, when they had their hands on the purse, they never once stood up for South Australia over this issue—despite the fact that their then Prime Minister had promised to build submarines in that state and then did not.

It got spirited away under the reign of Prime Minister Gillard. Where did it go? Senator Cameron, I see you shaking your head over there. You did not know where it went either. That is right: you were not in cabinet at the time. It was not your fault either, was it? All you want to do—those of you on the other side contributing to this debate—is blame someone else. But the state Labor government in South Australia has presided over the largest budget deficit in that state's history. Now we are hearing in evidence that it will only take a couple of hundred million dollars to refit the areas in Adelaide where we can build lots of ships. It is so airy-fairy. Money is just like confetti to those of you on the other side. You spray it all around. There is no fiscal discipline at all. Now the Minister for Defence has to come in and sort all this out.

You over there have compromised South Australia. Each and every one of you Labor-Greens alliance members in that last Rudd-Gillard-Rudd administration were delinquent. You abdicated your responsibility for ensuring the industrial nature of that precinct was protected. I am not going to stand here while you vilify people who do know how to count, who do know how to budget and who do know how to get value for money for taxpayers. The Prime Minister and the Minister for Defence are looking to ensure that value for money. I should include the Minister for Finance, who is here. He has to sit down there and try to work through all the health budgets, education budgets and defence budgets, the whole wickerwork of financial obscurity that you people presided over—and you wonder why we shake our heads when you go on with your confected outrage.

I am sure we will get a contribution from Senator Cameron and I bet it will be his usual picket-line rhetoric. He will say, 'You don't like jobs in South Australia.' I am sorry; that was a bad imitation—I apologise. But we expect to hear the usual union tub-thumping: 'It is all the bosses' fault'. In fact, the bosses were trying to tell the government at the time, but the government had no capacity to understand any of the business drivers, any of the reasons why this whole program has been put in such jeopardy. Labor had a $40 billion budget for this—when you can build the 12 submarines we need for $14 billion. Even the most ardent Labor supporters would have to say the maths is not right. I look forward to the rest of the hearing. I seek leave to continue my remarks.

Leave granted; debate adjourned.