John Williams (NSW, National Party) Share this | Link to this | Hansard source

The President has received the following letter from Senator Moore:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

The need for the Abbott Government to: keep its election promise to build Australia's future submarines in Adelaide; support Australia's strategically-vital submarine and ship building industry; ensure that Australia's future submarines are designed to meet Australia's unique needs for range, endurance and capability and; undertake an open and transparent tender process or a funded design study for Australia's future submarines.

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I rise today to speak on this matter of public importance. Let me remind the Senate of the coalition's promise to build 12 submarines in Adelaide. In May last year, the now defence minister stood outside the ASC in Adelaide and said:

… I want to confirm that the 12 submarines as set out in the 2009 Defence White Paper and then again in last Friday’s Defence White Paper are what the Coalition accepts and will deliver.

We will deliver those submarines from right here at ASC in South Australia.

You could not be more unambiguous than that, Mr Acting Deputy President Williams. You could not be more unambiguous than that, other than us noting that you are a Swans fan barracking this weekend. It is clear cut. The South Australian Liberal leader was standing next to Senator Johnston at the time, and this is what he had to say. He said that the state Liberals welcomed the coalition's confirmation that 12 submarines would be built in Adelaide under a coalition government. Confirmation—again, no mis-statements; no confusion; there was confirmation that 12 submarines would be built in Adelaide. No-one is under any illusions about the promise that the coalition made. And no-one is under any illusions that this government is about to break that promise by buying our submarines from overseas.

This puts at risk thousands of jobs in South Australia and across the whole country. It also puts at risk our strategically vital submarine and shipbuilding industry.

But it is not just Labor that has warned about the dangers of this broken promise. Instead of supporting the shipbuilding industry, the minister has spent his time since coming to government trashing it. Quite frankly his behaviour has been disgraceful. He has insulted our shipbuilders, calling the air warfare destroyer, 'a disgraceful mess' of a program and 'a bit of a skunk'. He has also claimed that, when he directed work for two new Navy supply ships overseas, he did not allow an Australian company to even bid for these two supply ships. This is what he said: 'It was beyond the capacity of Australia to produce.' This is a minister and a government that have not seen an Australian shipbuilding job that they do not want to send overseas. On those two supply ships, he said, 'Only the Spanish or only the South Koreans can bid'—no Australians are allowed to bid.

What is the industry view? What is the broader defence view? This is not, as some seek to portray it, industry protectionism; this is about defence capability. There is growing speculation that the government will buy submarines from Japan. Labor are concerned that these submarines are not designed to meet Australia's unique needs for range, endurance and capability. Again, Labor are not the only ones who think this. Retired Rear Admiral Peter Briggs and retired Commodore Terence Roach recently warned the following:

Submarines are not cars—you cannot simply switch to another like disposing of a Holden to buy a Mitsubishi …

They are designed for a specific purpose and unfortunately big compromises would have to be accepted if Australia is to buy Japanese without serious design modifications, incurring further time delays, high cost and risk.

These are serious, serious concerns raised by former senior figures in the defence industry. But it is not just Australian submarine experts warning the government.

Senator O'Sullivan interjecting—

Senator Edwards interjecting—

Let me be clear for those opposite who are interjecting. Labor spent $220 million selecting a process for the new submarines. Japanese submarine experts are issuing warnings also—it is not just Australian submariner experts; it is Japanese.

In question time today, Senator Wong asked a question about comments made by Senator Fawcett in the party room earlier this week that was reported in today's The Advertiser. Senator Fawcett and, it appears, other South Australian senators about to make a contribution claimed that they are going to be happy if Adelaide is able to secure the maintenance work on Australian future submarines, abandoning hope that they will be built in Australia. Those opposite from South Australia have rolled over and given up on the election promise they so cynically made to confuse and mislead voters in South Australia. The very people who voted for South Australian senators were misled before the election.

Senator Wong asked Senator Abetz whether or not this was just the softening up process. We saw it yesterday, we saw it today and we are about to see it again. The coalition are going to abandon South Australian workers. South Australian people are going to be abandoned by this government. This will show a lack of conviction from South Australian senators on this issue and it is very disappointing to watch the South Australian Liberal senators just roll over and go along with breaking a solemn promise.

Those opposite made a big thing about this. They talk about breaching trust. They said: 'We will not tell lies. We'll keep our promises.' That is what they said before the election. Not that long ago South Australia had senators who would stand up for their state, who would stand up for jobs and industry. But it seems those days are over. They could be taking lessons from the National Party in this chamber. But Senator Fawcett's statement reminds us that all South Australian Liberal senators have abandoned their state. I notice that Senator Birmingham was listed to speak on this motion. I do not see him in the chamber; maybe he has been subbed out—no pun intended. I hope that he uses the opportunity, or any replacement for him, to call on this government to keep its promise. That is all we are asking in this chamber—keep your promise that you made to build 12 new submarines in South Australia.

When it comes to the price of Australia's future submarines, there is no doubt that it will be substantial. That is why it is essential we get it right. But all we have at the moment is wild speculation, rumour and innuendo from those opposite. One report the government like to toss around is that it will cost $80 billion. This is a ludicrous figure put out by the government to try to justify why they want to break their promise. So when we are talking about a 40- to 50-year project, and that is what these submarines will entail, we have to get it right. Why can't we just have a fair, open tender process? Anyone can bid. In an open tender process, we get the best price. All of a sudden, those opposite do not want the best price. So I urge those opposite to rise up and stand up for your state. (Time expired)

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

I rise on this matter of public importance. The future submarine project is certainly a significant matter for South Australia and for all Australians. I have given up some of my time—Senator Conroy, you might want to come back to the chamber to hear from Senator Fawcett, who put it out there quite publicly this morning that he has been misquoted in The Advertiser. It cannot get any plainer that. He is an honourable fellow, as we all know

He is not one of these fly-by-nighters that you see come and go from over the other side on some union deal. He will defend himself, of course, in his time.

That takes me to a significant new dimension in the Labor leadership after the opposition leader's now notorious address to his union support base from the back of a truck. You were there on the back of the truck, Senator McEwen, through you Mr Acting Deputy President. I cannot remember seeing Senator Gallacher over there, but I guess he was there somewhere, trying to duck.

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

He was here doing an inquiry, idiot!

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

The alternative Prime Minister to this country revealed a number of things during his moment. He revealed where his heart remains—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Order! Senator Edwards resume your seat. Senator McEwen, that is unparliamentary. I ask you to withdraw.

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

I was at a Senate inquiry in Canberra, not trying to duck—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I am addressing Senator McEwen. Do you not think you should withdraw that?

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

I withdraw.

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

I will have to ask you what I was accused of afterwards. The opposition leader, far from growing in his new job as opposition leader, revealed that he remains the picket line performer that he always was. If we are going to point back to a time in the career of the opposition leader, we will put that as a high-water mark, I suspect. It has been reported in newspapers, and I fully concur, that Mr Shorten's roused his flag-waving union audiences with references to race, fear and protectionism. Really? Has Australian politics got to that in 2014? This is something out of a 1950s black and white movie.

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

Back to Arthur Calwell.

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

Yes. Mr Shorten's rant painted Japan as a war-time enemy of Australia rather than as an economic partner of such vital significance as it is today. This flippant rhetoric is not just reckless; it is how diplomatic incidents take place and it is how they take flight. This how you fuel the very insecurities in a nation. I do not know what on earth he was thinking that day. Perhaps Senator Gallacher might have been there to pull him off the back of the truck to stop him from making a fool of himself. Where was the outrage from all those South Australians in the federal Labor government back then? Why was it that you oversaw the systematic demise of the defence-spending budget over the six years in your government? Why did you have Defence white paper after Defence white paper? You delayed 119 defence projects, 43 were reduced in scale and eight projects were cancelled altogether. Under Labor, the Australian defence industry lost more than 10 per cent of its workforce. The bottom line about Labor and defence is that they declared submarines a priority in 2007 but had done no work on them by the time they left office. This is why we find ourselves in the position we are in today. You are reckless, you are careless and you are playing around with the nation's sovereignty. (Time expired)

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

The time is fast approaching when the government will decide Australia's future submarine fleet. In that time it is important to build the case for a sensible, low-cost and methodical approach to that procurement, which will shape the future of the Australian Navy, as well as naval shipbuilding in this country.

That the coalition promised before the last election to build Australia's next submarine fleet in Adelaide is not in question. I have here a list of 16 separate public statements by Mr Abbott as opposition leader and by Senator Johnston as the then shadow defence minister made from September 2012 to September 2013 about building submarines in Adelaide. But since June of this year we have seen the government walking back from its commitments in relation to naval shipbuilding in Australia in general and a future submission project in particular. As John F Kennedy aptly put it, 'Sincerity is always subject to proof'. This government's sincerity in relation to its submarine promise is being stretched to breaking point. But there is still hope that common sense will prevail and the competitive processes followed that pit the best of submarine designers around the world to build them here in Australia.

The government should not be afraid of such competition. Indeed, it is standard practice in defence, when large and expensive defence capabilities are being sought. Competition will tease out the best all-round package for the Royal Australian Navy, for Australian industry and for the taxpayer. Can we all just take a deep breath here. The cost of building submarines is cited to be up to $80 billion by some, but the German sub designer TKMS has quoted a price of 12 submarines being built in Australia, by Australians, in Adelaide at well less than $20 billion.

Since the latest round of speculation about Australia outsourcing its submarine build to Japan, experts in both countries have raised serious concerns with such a course of action. When it comes to capability, sole-sourcing Japanese subs will deny the Australian Defence Force of its stated capability requirements. Publicly available figures reveal that the Soryu has less range than even the smaller European subs available off the shelf and far less range than our existing Collins class submarines. Procuring a Japanese submarine would also likely complicate their ongoing sustainment here in Australia. Japan run their submarines for only about 20 years before replacing them. Our Navy runs their boats for 30 to 40 years. In the latter years of their service, when wear-out failures start to manifest themselves, we may find ourselves with an orphaned class of submarine.

Outsourcing to Japan would mean Australia would miss out on the experience and know-how which comes from the building of submarines, the experience and know-how which can be used to advantage when delivering through-life support to the subs. Off-shoring submarines to Japan will have a massive negative flow-on effect to Australian workers in the naval shipbuilding sector they support and to the economy in general. The Australian economy and industry will miss out on the benefits of technology transfer, innovation, workforce training and skills associated with building submarines and the massive multiplier effect to our economy.

Western governments, including Australia, have always viewed their defence industries as an input to overall defence capability. A strong defence industry is a precondition for a strong defence force. And finally, this decision will have disastrous impacts on my home state of South Australia. I do not want to see my state being de-industrialised through foolish, reckless, federal government policies. We have already seen it with the automotive sector. We may well see it when it comes to naval shipbuilding. We must get the right result here. It is in the national interest to build those submarines right here in Australia, with South Australia playing a key role. Otherwise, we will be looking at massive job losses. We will be looking at outsourcing billions of dollars worth of jobs overseas. That is reckless and must be avoided at all costs.

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

I commend Senator Xenophon for his articulate contribution with respect to the economic and technological benefits—and other benefits—to South Australia. But I do have to take issue with Senator Edwards's contribution. Basically I have said here before that he is bereft of knowledge outside of the wine industry, and I think I am getting further and better particulars and evidence about that every time he contributes.

This is so far off the planet from Senator Edwards. Jobs—and union jobs—highly paid, highly skilled jobs involve employers. They involve businesses; they involve technology; they involve technology parks; they involve very successful enterprises. And I would have thought they would be the natural constituency of someone purporting to be a Liberal.

His contribution repeatedly ignores the value of the defence industry to South Australia. To throw in the odd interjection of 'Where's the money?' or 'The NBN!' is not serving South Australia's interests well. That is what he is elected to do. He is elected as a senator for South Australia to serve South Australia's interests. That includes the interests of all South Australians. He may be more partial to employers; I do not have a problem with that, because employers employ workers; they provide opportunity for advancement.

There is another former Liberal in South Australia; he was the leader of the Liberal Party in South Australia and is now the Minister for Investment and Trade, the Minister for Defence Industries and the Minister for Veterans’ Affairs—Mr Martin Hamilton-Smith. He has an outstanding Liberal pedigree, but he could not stomach the position of the other side and he joined the South Australian government. Have a listen to some of the things that he said:

It beggars belief that any federal government would seriously consider spending up to $250 billion of Australian tax payers' money on buying naval ships from overseas to create jobs and enterprise in someone else's land ahead of ours.

He has obviously caused a lump in all of the spend on defence shipbuilding and submarines over the life of those things. That is the important thing that Senator Xenophon is homing in on. This is a spend over decades—a spend over thirty years—and it is a spend that we have had a high level of investment in. With the Collins class, we have finally got it right. And the Minister for Defence has confirmed that; the problems with the Collins class are gone.

What has really distorted this debate is that it is viewed in a prism of economic terms, in the view of one budget or two budgets. What we should be looking at is economic benefit and economic cost over 30 years. We should be looking at our capability to build submarines in this country and to guarantee we can sustain it during conflict and peace. 'During conflict and peace' is a very important point. The technology that is fitted to submarines or aircraft or air warfare destroyers often comes from another provider—the United States is the most obvious example. They have stringent requirements on those add-ons, if you like, that make the capabilities efficient. We need to be cognisant of that.

I do not think anybody is seriously suggesting the we simply go out and buy a submarine off the shelf and hope we can get the mileage right and the range right and the capabilities right. The most obvious people to buy submarines off if you are just going to do that is the Chinese; they have 60 of them. If you are just going to go to a discount warehouse and say, 'Who has the cheapest submarines and warships?', and buy them, you ought to come out and tell the South Australian electorate that.

They ought not to stand up and say, as has repeatedly been said in this chamber: 'We will deliver the submarines from right here in ASC in South Australia. The coalition today is committed to building 12 new submarines here in Adelaide.' That is on the public record repeatedly. It is built on the investment of previous Liberal governments and Labor governments. Sure, it has not been a great, 100 per cent, resounding success, but tell me anywhere in the world where this capability has been developed without problems, where designs have translated to a build of a specced-out vessel that performs absolutely as it should.

A lot of these things, the capabilities that we require, are not what the warship or the submarine were originally designed for. I cannot go anywhere in Adelaide without being asked: 'What are we doing about the submarines?' You will meet people who say: 'Economically we probably can't afford them today in this light'—if they think the budget is in a bad state—'Nevertheless, we should do it, because it's the right thing for this country. It's the right thing for those kids who are seeking apprenticeships. It's right for the small and medium enterprises who are seeking to sustain their 25 to 30 workers. It's the right thing for those transport companies that deliver the wherewithal that keeps those businesses going. It's the right thing for those smoko vans that sell their wares around the place. It's the right thing for the service stations where workers come and go and fuel up from.' If we are to take Holden out and if we are to diminish our manufacturing capacity any more in South Australia, we are really going to face huge challenges, not small challenges.

We have a really good defence industry; up to 27,000 people are sustained by it. It is not a static industry; it is an industry that trains people. The industry gets apprentices in—and they may well do their apprenticeship and go and work in the mines or in some other section of the economy. Take that all away, and what is South Australia going to be left with?

Well, Senator Edwards will be all right because he will be still growing his grapes. What are we to be left with? Where is the opportunity for people who go to TAFE, who get an education as an electrician or a fitter and turner? What will we be left with? Very little. This is a fundamental decision which should be viewed over the long term.

David Johnston stood there and said we will do it. The Prime Minister is backing away from it. We, the South Australian senators in this chamber, should be as one on this issue. Every Liberal and every Labor senator should be standing up for this capability to be maintained, improved and sustained in South Australia. What hinges on this decision are 27,000 Defence jobs in this state, about 3,000 jobs in shipbuilding and industry activity worth hundreds of billions of dollars over the 30- to 40-year horizon. And it is a really widely held, deeply felt issue in the whole of South Australia.

I have heard cynics say that the Liberal Party thinks it is at risk in one seat in South Australia. I will make a bold prediction here: if they go down this path and they shut down this section of manufacturing on top of Holden, they are at risk in more than one seat. It is such a widely held and deeply felt issue that they will be closing down the manufacturing in our state, which was probably created by Playford. Playford was the one—people can go back a bit further than me and argue there was Labor involvement in that—who thought that manufacturing and South Australia were a good fit. And for a very long period of time we have had automotive manufacturing and it has been a very good fit.

I have been involved in trouble-free deals with the automotive industry, guaranteeing supply for the export of cars with no industrial disputation. The unions in South Australia have always worked collegially and collectively on all of these manufacturing projects not to have disputation but to have no disputation in order to secure the jobs, to secure the investment and to sustain a place where kids can go and learn a trade, have a good life, earn decent money and get a highly skilled well-paid job. It will be an awful day if this Liberal coalition government takes that opportunity away from hundreds of thousands of South Australians.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

I am incredulous that the Labor opposition would want to give the coalition the opportunity to ventilate their failure when in government on issues associated with the shipbuilding industry, the submarines in Adelaide, the defence industry in general and the future submarines designed to meet Australia's unique needs for range, endurance and capability. I am reading now from what was the actual letter from Senator Moore to the President calling on the government to undertake an open and transparent tender process or a funded design study. This was from a government which demonstrated its gross failure in leadership, in management, in vision and in economic control of this nation.

Let me start by telling you what a mature, measured, rational coalition government will not do. The first thing we will not do is fail the Australian people by failing to provide adequate funding and adequate capability for Defence whether that is Defence personnel, whether it is materiel or whether it is other assets in the defence sector. Secondly, this government will not needlessly waste taxpayers' money on poorly conceived, poorly designed, poorly executed Defence projects and then desert the participants. Thirdly, this government will not, to the South Australian shipbuilding workers or the industry, fail to plan, to invest, to communicate and to demonstrate a viable direction for Defence acquisition and for the maintenance and support of Defence assets, many of which are developed in South Australia.

This mature, sensible government will not leave a future government, a future parliament or the people of Australia with a shipwreck of an economy. That of course was visited upon the people of Australia by the outgoing Labor government in 2013. That government inherited no net debt and actually had some $20 billion in cash, earning interest. Only now of course we see that we are paying $1 billion every 30 days on interest. That is not repaying this Labor debt. We are paying $33 million a day interest and we are borrowing from overseas to do it. Finally, this government will not leave a Defence Force, which is now so under resourced, overstretched and exhausted and up until September 2013 with the lowest morale it had had in many years as a result of that Labor government.

Let me, if I may, go back to a statement by the then opposition leader, Mr Kevin Rudd, on 31 October 2007. I quote from his statement:

A Labor government would … ensure the submarines were built by ASC at its Port Adelaide site, with construction to begin in about 2017.

He went on to say—

Senator Cameron interjecting—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Order! Senator Cameron.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

it is a shame Senator Cameron is not listening; he might learn something. He went on to say:

… $6 billion air warfare destroyer project in Adelaide at that time would be tapering off.

Mr Rudd, in opposition, went on to tell the shipbuilding industry, tell the workers of South Australia:

Starting the process this year will guarantee continuity of work for South Australia's defence industry and those employed in the sector.

What did we see in government? The first thing we saw was deferring the critical strategic decision on the submarines. The second thing we saw was deferring the critical strategic decision on the Navy tanker ships.

Senator Cameron interjecting—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Senator Cameron, I will not ask you again.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

So what did we see? We saw an empty promise; we saw no delivery. We saw a Rudd-Gillard-Rudd government cut $20,000 million, $20 billion, not out of defence in general—I will get to that. This was just the submarine program. This was after the promises of October 2007—only a couple of weeks before the election, as I remember. It cut out $20 billion, and you would not believe it, with the compliance of the then state Labor government. Where were they all at that time? Where were the fine words? I accept Senator Gallagher's concerns, because I agree with them.

This was the Labor government who appointed then Minister Stephen Smith who made it very plain to everyone, particularly to the defence community, that he did not want to be the defence minister; he wanted to be the Foreign Affairs minister but then Prime Minister Gillard, by her own statement, actually had an even worse person than him—and that was Mr Carr—to come in and do that job.

So what did then defence Minister Smith allow? He allowed defence spending—this is the great state of South Australia supported by Labor governments—to get down to 1.56 per cent of GDP. Do you know you have to go back to between the two world wars to find the previous time that defence spending got down to that low level? As if that wasn't good enough: under the great leadership of Stephen Smith, they cut yet another $16 billion out of the defence budget leading up to 2016-17.

I have not got the time to devote to the excellence of the now defence Minister Johnston but, as he said, the day he took over as minister, he opened up the box to see where all the forward plans were, to see where the vision was left to him. Do you know what was in the box? It was empty. They did not have one. They were bereft.

We are fortunate in this debate because, of the three colleagues to follow me, Senator Reynolds, has had a distinguished career in defence; Senator Fawcett himself has had a distinguished career in defence; and Senator Birmingham's knowledge of the economy of South Australia is very, very solid. I am delighted to hand over to my colleagues to conclude the discussion. My only regret is that I do not have several hours to devote to this topic. I thank Senator Moore for the opportunity.

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to be able to speak once more on Labor's commitment to the future submarine project, to shipbuilding in Australia and shipbuilding jobs. I would like to acknowledge that today and tomorrow in Canberra we have a number of delegates and workers from the shipbuilding industry and their unions who are lobbying to protect the shipbuilding industry and their jobs—high-tech important jobs for Australia.

Tomorrow they are going to be asking senators and members to come outside and sign a pledge to support those jobs and keep those jobs in Australia. I urge all my senatorial colleagues to get out there and get behind them. I am pretty sure I know which ones will be going out to sign the pledge. I am pretty sure I know which ones won't be going out to sign the pledge, and that will be all of those coalition senators over there and Senator Bob Day, I suspect.

A fortnight ago I joined my fellow South Australian Labor colleagues at Techport at a rally to show our support for the South Australian shipbuilding industry and shipbuilding jobs. If you haven't been, Mr Acting Deputy President Williams, it is well worth a visit. It is a spectacularly efficient workplace. It is an area where some of the best jobs in South Australia are and it produces of course ships. It is where we anticipated, given the promises of the Prime Minister and the Defence minister, the new submarines would be built. But of course we know that there is no commitment now and that promise looks like it is going to be broken. Those future submarines may not be designed and built in South Australia.

I was at that event at Techport with my Labor colleagues, MPs Mark Butler, Nick Champion, Kate Ellis, Tony Zappia and also opposition leader Bill Shorten. He spoke to the workers and promised them that Labor would continue to fight for their jobs, for those 1,500 or so workers who came out that day.

I was able to speak to a number of them and hear their very real concerns about the future of their employment. They weren't just concerned about their own employment; they were really concerned about the future of South Australian jobs and the future of the industry of which they are so proud and in which they do such a good job.

Those workers understand that Australia absolutely needs this new project, the future submarine project, at Techport and they are very concerned about the promises that were made to them before the federal election when the Defence minister stood up and gave them a firm commitment that the 12 new submarines would be built there. They are very concerned that the current government seems to be backflipping on that commitment.

They were also promised by the Prime Minister just before the state election in South Australia that the submarines would be built there. He stood up with Steven Marshall, the state opposition leader, promising that the future submarine project would continue in South Australia. Those workers have been betrayed and are very, very disappointed with the current government. They have been asking us in the Labor Party to do what we can to support them and their jobs, because they understand how important those jobs are to South Australia.

There are other aspects of course to this debate. It is not just about the jobs in Australia and the importance of shipbuilding and the Australian Submarine Corporation to South Australia's economy; it is also to ensure that Australia is in control of its own defence capability.

We have heard from numerous experts in this field saying that Australia runs a very great risk, if it outsources the design and build of its new submarines to another country. We know that this is being looked at very carefully by the coalition government. They will seek to purchase submarines from somewhere else and therefore deny Australia the control that it needs to have over this very, very important defence capability.

I note that experts agree that Australia should maintain this design-and-build capability within Australia, because it ensures that Australia has control of the capability. But it is also very important at this particular time in our history, when we are talking a lot about national security, that we do have control of our own national security. That means that we maintain that capability in our own country, even if it does put a premium on the build of the submarines. I note that the coalition like to make the claim that Australian workers are incompetent when it comes to shipbuilding. Of course, nothing could be further from the truth. We know that Australians can design, build and maintain these submarines, and they should be given the opportunity to do that.

The former Chief of the Defence Force, His Excellency General the Honourable Sir Peter Cosgrove, current Governor-General of Australia, is also very concerned that Australia maintains the capability within Australia to design, build and sustain our submarines. It seems to me entirely hypocritical of this government to even be contemplating design, production and build of the submarines by another country when, at the moment, national security is very high on the agenda.

The economic flow-on from ensuring that the build of the submarines continues in South Australia is without doubt. We know that as well as maintaining the 3,000 actual jobs at the Australian Submarine Corporation there is a big knock-on effect in defence industries in South Australia. More than 25,000 jobs in South Australia are also relying on the defence industries. We need to maintain manufacturing in South Australia so that those jobs are kept in South Australia. This is a very important industry in South Australia and I am very pleased that Labor senators are fighting to maintain it there. Labor senators will not cede control of our defence capability. We will continue to fight to maintain the industry in South Australia. We ask coalition South Australian senators, in particular, to stand up for their home state and support the workers, support the industry and ensure that shipbuilding continues in South Australia.

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

I rise today on this very important matter of public importance. The Abbott government is getting on with the job of ensuring that our Navy has a sustainable and affordable long-term submarine capability. Despite all of the rhetoric this afternoon from Senator Conroy and his colleagues, this is a decision on the future of Australia's submarines and it has not yet been made.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Another Liberal lie!

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

In fact, we would not be having this conversation at all, Senator Cameron, if Labor had not abrogated its responsibility to make the decision during its six years of government. Unlike Labor, we will be making the decisions necessary to avoid a capability gap between the Collins class and the future submarine. In doing so, however, the coalition will ensure Australia has the military capabilities to deter threats and project force. But defence acquisitions must always be made on the basis of our national defence requirements. And, when it comes to defence, we cannot be ruled solely by industry policy and protectionism. This is a huge and significant national investment in our defence capability and it is essential that we get it right. But it is a decision the previous government should have taken. They had 4½ years after the release of the 2009 white paper to do so, but they did not. That is a fact. It is not a cheap stunt like those that Senator McEwen was just referring to.

Let us have a look at some other facts. Despite all of the Labor promises, under Labor the share of GDP spent on defence fell to 1.56 per cent—the lowest level since 1938. In fact, in the 2012-13 budget Labor made the biggest single cut to defence since the end of the Korean conflict. They cut 10.5 per cent from the budget.

I experienced firsthand the impact of the broken promises that Labor made in defence. As the director for strategic reform in the Army in 2009 and 2010 I, like many others, took the Labor government at its word and worked hard to implement the strategic reform program—a program the government promised us would reduce costs and allow the resources that were to be freed up to be reinvested into Force 2030. What a demoralising and dispiriting breach of faith that proved to be. Senator Cameron, guess who was the minister during that period, who failed to make the decisions despite promising to deliver the future submarine capability? Any guesses, Senator?

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Senator Reynolds, direct your remarks through the chair.

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

My apologies, Mr Acting Deputy President. It was Senator Faulkner. In fact, I will quote Senator Faulkner. He said:

This Government is committed to carefully planning for Australia’s next generation of submarines.

The year he made that commitment was 2009. The Labor government spent 4½ years doing so much planning, they did no acting—apart from removing the funding to fund the future submarines.

Let us talk a bit more about facts. Over their six years in government, not only did unemployment increase by over 200,000 jobs but the Australian defence industry shed more than 10 per cent of their workforce because of Labor's budget cuts and project deferrals. So the depth of the opposition's hypocrisy on this is breathtaking. It would be sad if it were not so serious for Australia's defence.

The so-called 'valley of death' that may exist for our defence industries is entirely the making of the Labor Party, who wasted their six years in government. The simple fact is that under the DCP it was never affordable and the capability promises were purely fictitious. Not only does Labor's mismanagement of the defence program mean that defence face a deficit of $12 billion on current plans over the next decade, but an additional $18 billion is required to achieve Force 2030. To put it more simply, as a direct result of Labor's budget cuts and policy inaction, a staggering 119 projects were delayed, 43 projects were reduced and eight were cancelled altogether

That is what we on this side of the Senate and the defence industry and defence workers inherited from those opposite.

In 2007, Kevin Rudd promised that a Rudd government would make it a priority to ensure that the necessary preliminary work on Australia's next generation of submarines was carried out in time for consideration and approval in 2011. Two years later, Labor promised 12 new submarines but provided no plan and no funding and, as I said, they took $20 billion out of the Future Submarine program—so no plan, no money and no jobs. I have to ask: where was the AMWU then? Where was the South Australian government then?

In stark contrast, we have taken the Future Submarine program out of the too-hard basket and we have announced that, as part of next year's defence white paper, this government will produce a shipbuilding plan. Australian industry will finally have the long-term strategic direction it has lacked over the last six years. We will do it quickly but we will also do it effectively. It has to be done on a credible and sustainable path to achieve our two per cent funding commitment. This means prudent and sustained investment in adaptable and flexible defence capabilities that are best suited to handle strategic risks over the long term, especially as the ships, aircraft and other equipment our Defence Force uses are essential infrastructure that remain in service for decades. We are currently talking to a number of countries to explore the best possible option for Australia to obtain those outcomes. We are also determined to deliver this capability on schedule and on budget. We owe this to hardworking Australian taxpayers.

I remind senators opposite—particularly those from South Australia—that a significant amount of money is already being spent in South Australia and there will be significant future work, regardless of the decisions on the Future Submarine. The amount of defence investment in South Australia is indeed already substantial.

In conclusion, this decision has not yet been made, but this government will deliver an affordable and a realistic plan. We are a government that are making the right decisions for the right reasons. (Time expired)

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I too rise to speak on this matter of public importance. Firstly, I would like to thank Senator Edwards for giving up some of his time to give me an opportunity to make some remarks. Both Senator Wong and Senator Conroy referred to an article in the Advertiser today. I would have thought that, after all the time they have had in politics, they would have learnt to not believe everything they read and to check their facts. In actual fact, the journalist, who I have spoken to, is quite apologetic for the way the headline was put on by the editor. Interestingly, the same source material that was given to InDaily in South Australia—if people care to look at that—has delivered quite a different article in the paper, which articulates more closely my view on submarine building.

I encourage people to go and have a look at that or have a look at my website and read and judge for themselves where I stand on this issue. You can also go and look at the speeches I have given in this place on 3 September, 28 August and 17 June around shipbuilding, submarine building, some of the history and some of the facts around decision times and planning times required and why the coalition is taking the approach it is with things like the Future Frigate program.

More importantly, today what I would like to touch on in the one minute and a bit I have left is the future, as I see it, for submarines in Australia. Firstly, as someone who has been a military officer and has operated military equipment, I know that it must be fit for purpose. It must be able to meet the military's operational requirements. At the moment there is nothing off the shelf from any nation that achieves that, which means that any solution the government chooses will have cost and risk considerations that must be made.

As we look around the world, the model which is probably the most effective at reducing risk is one employed by the Germans. I am not necessarily advocating that we buy their submarine, but their model is effective. They work with the customer and the customer's engineers and manufacturing people to evolve the design to meet the customer's requirements. They work with the customer to develop their local supply chain, so that they can feed into the build and sustain it through life. They build the first couple of boats in Germany with the customer and the customer's people so that they learn the processes. They then transfer that process to the customer's location and build the rest of the boats, so that local industry and local workers can develop that sovereign capability to maintain the submarines.

That is the lowest-risk way of transferring a suitable design, build and sustainment capability to Australia. If we learnt anything from Collins and from amphibious ships, it is that we need that sustainment. It does not need to cost more. The benefits to through-life support and particularly the spill-over effects from complex defence procurement mean that we can build it in Australia and that can give us the best capability at the best value for money for the taxpayer. They are the decisions that this government is looking at and evaluating in the interests of our national sovereign capability. (Time expired)

Simon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Link to this | Hansard source

It is a pleasure to follow my colleagues Senators Edwards, Back, Reynolds and Fawcett in their contributions to this debate. Each has added a very clear framework as to why the motion put forward by the Labor Party is politically opportunistic, overly simplistic and indeed is foolish when it comes to the approach that we need to be taking on what is a very complex issue. Senator Fawcett's contribution just then is a demonstration of how complex a defence procurement decision of this scale and magnitude it is and how careful we need to be about ensuring that we get it right.

Let me congratulate the Labor Party to the extent that they have managed to some degree to turn this complex debate into one far too simplistic and far too politicised and one that seems to ignore the fact that, in making this decision—a decision involving tens of billions of dollars of taxpayer funds and a decision involving one of the most important capabilities for our defence forces—we must seek to get the best outcomes for defence capability, for the Australian taxpayer and for Australian business and workers. The Labor Party seem hell-bent on turning this discussion and debate into one that is simply about industry or jobs policy and ignoring the fact that it must also be about defence policy and responsible budget management.

The truth is that we must get all three of those components right in the decision we make, and that is absolutely what our government will do. We will work through the proper processes, as we are doing in the development of the defence white paper, to get all three of those components right—to get the right result for the defence industry, to get the right result for our defence forces, to get the right result for taxpayers, to get the right result for Australian workers. The assurance I give the Senate is that we will not take as long as the Labor Party did to make those decisions.

As people have heard in this debate, in 2007 the then opposition leader Kevin Rudd promised that he would kick-start the building of new submarines in Adelaide. He said:

Starting the process this year will guarantee continuity of work for South Australia's defence industry and those employed in the sector ...

He did not start the work in 2007 or 2008 or 2009, and nor did Ms Gillard in 2010 or 2011 or 2012, and nor did either of them in 2013. The entirety of the Rudd-Gillard-Rudd governments failed to do anything of substance during that time. No contracts were entered into and no meaningful work was done to settle on the type of design that would be applied. Instead, unbelievably, the Labor Party removed $20 billion from the forward budgeting for the submarine program, and yet they have the hypocrisy to come in here today and lecture us in the way they have been.

Theirs was the most disastrous management of defence in the nation's history. Despite running record budget deficits and spending at levels never seen before in the country, the share of GDP spent on defence under Labor plummeted to the lowest level since 1938. A whopping 10.5 per cent was cut from the defence budget in 2012-13 alone. So I will not take the lectures that we have had in here and I will not take the hypocrisy from those opposite.

What I want to assure Australians, and particularly South Australians, is that we will make the right decisions for our defence capability, for our budget and for jobs in industry. I want to assure them that, as a South Australian Liberal, I will do all that I can to ensure that as much of the future shipbuilding, submarine building and maintenance work as possible, and as responsibly possible, comes to South Australia, and all of my South Australian Liberal colleagues are working to that outcome. We welcome the fact that the Prime Minister, only within recent weeks, has committed to the fact that there will be more jobs for South Australia as a result of the submarine contracts to be let in future. That is an important commitment. It is a commitment that will reassure, I hope, many South Australians that the future of Osborne, the future of our shipyards and the future of jobs will be secure. But we have to take the right and careful decisions.

As people know, we have had a fraught history with shipbuilding in this country. We have a history of challenges. The Collins class submarines had many challenges. Recently, the Auditor-General had something to say about the work on the air warfare destroyer—cost overruns in excess of $360 million, delays of two years and labour productivity less than half the international benchmark. We will work to fix those problems and we are working to fix those problems, because we want to make sure that the workforce and the businesses there are competitive in future and that they can compete for work like this. We want that work to go in those directions, but we must make sure that it is going to deliver ships and submarines that meet our defence requirements and the costs that taxpayers can reasonably at responsibly bear.

We will not engage in the shrill politics and hysteria of those opposite. We will not engage in the type of xenophobic actions of Mr Shorten, when he goes down there and deeply offends potentially our Japanese friends by trying to create some type of wedge in this type of debate. We will work to make sure we get the right outcomes for our industry; we will work to make sure we get the right outcomes for our defence forces; and, yes, we will work to make sure that we do have an ongoing industry in South Australia that employs South Australians and creates more jobs in the future. That is our commitment.

Sue Lines (WA, Australian Labor Party) Share this | Link to this | Hansard source

The time for the discussion has expired.