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

I move:

I wanted to take note of the future of our submarines because it is too important for this government to cut corners when it comes to our naval capabilities. The government has the power under Defence procurement guidelines to ensure a funded project definition study is undertaken for our future submarines. This is what the government should do. It is deeply troubling that Senator Abetz refuses to match Senator Johnston's refusal to commit to this simple recommendation made by the Senate committee report. In fact, it would be a national scandal if the government did not undertake a competitive tender including a funded project definition study for this multibillion-dollar acquisition.

We have heard all the excuses so far. The latest is that going through a proper process may lead to a capability gap. This is just absolute nonsense and rubbish and was demonstrated to be so by expert witness after expert witness at the Senate committee hearings into this issue. These experts testified that there remains sufficient time to conduct a competitive tender including a project definition study for the future submarines while avoiding the capability gap. These were experts like retired Commodore Paul Greenfield, who said:

… there does not have to be a capability gap if we get on with it now.

The government should listen to the experts and get on with this vital project.

To give you an example of the sheer incompetence of this government, last week the Minister for Defence announced that he was ruling out a military off-the-shelf option for a new submarine fleet, but this was a decision that we took 18 months ago. So it has taken this government nearly 15 months to make the same decision that we took 18 months ago. So congratulations; you've had the foot to the floor, you're on top of your brief! Eighteen months ago the previous government took this decision. The minister went on to say at the Submarine Institute speech last week that Australia's next submarine will have a longer range and endurance than any diesel electric submarine currently available off the shelf. Twelve months wasted. Twelve months pursuing another thought bubble of the current Prime Minister, who went off to Japan, had a bit of a chat with the new Prime Minister up in Japan, came back, ordered Defence, overruled the minister, ordered DMO: start looking at buying Japanese submarines; they are pretty good, and we should grab hold of them. Twelve months later—12 months of wasted time—what we see now is the minister ruling out the option of buying existing Japanese submarines.

Under the Defence procurement guidelines, the minister could put in place a funded project definition study and he could do it immediately to ensure there is no capability gap. But just like when it came to the Prime Minister telling Defence he wanted jump jets—or STOVLs, as they are known—to be used on our LHDs, and Defence said, 'Oh, my goodness!', we have seen in this morning's paper that they are going to be a waste of money. (Time expired)

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

I am just amazed at Senator Conroy saying that the government has not acted on the Senate inquiry's recommendation. I recall back in 2009 when I launched an inquiry into liquidators and insolvency practitioners that there was a unanimous recommendation from the committee, then chaired by Labor senator Annette Hurley from South Australia. The previous government did absolutely nothing. Thank goodness we will be acting on those recommendations in, I believe, the very near future. For Senator Conroy to say that we should be acting on this specific recommendation of a Senate inquiry is so ironic having seen what those opposite did when they were in government.

It is just amazing how those opposite have little or no understanding of money and money management. The debt that we inherited at a growing rate—and this was reaffirmed here today in question time by Senator Brandis—was rising to a projected $667 billion. Mr President, you were probably around in this place at the time we heard that there was going to be a budget surplus under the previous government. The then Treasurer, Mr Wayne Swan, was going to deliver a surplus. The last time we saw a surplus from a Labor government was in 1989 when Senator Dastyari was just six years old. I have raised that before in this chamber.

Scott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | Link to this | Hansard source

A very small one.

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

Exactly, Senator Ryan—a very small one. I will take that interjection. The word 'surplus' does not exist in the Australian Labor Party's dictionary.

Scott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | Link to this | Hansard source

It would have been by accident.

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

Yes, it would have been by accident. Something would have gone wrong! So here we are cleaning up their financial mess. That is what this whole issue about Defence spending comes back to. We inherited such a mess. To me, being in this place and being part of government and the parliament is about being a caretaker for future generations of Australians, whether it be protecting our borders, bringing the asylum seeker boats to a stop, funding our Defence Force or managing the money and not leaving future generations of Australians wallowing in debt while mortgaging their futures away.

Every time we as a coalition get into government following a period of Labor government we see that the chequebook has been simply splashed around. There is a debt. The bank account is empty. It does not matter whether they are state or federal Labor governments. In the history of the last 40 years, that is how it has worked. Hence, we have to make sensible budget decisions, no matter in which portfolio, in relation to how we spend the taxpayer dollars here in our nation. As Senator Abetz says, the government do not have money. We take money off the people or we borrow it. When we borrow it, it is up to the people to pay it back with interest. We are now paying $1,000 million a month interest on the debt that that lot over there built in just six years in government. Here they are saying, 'Let's build the submarines. Let's get it moving.' 'Let's do it properly,' is what I say. Let's get the best result we can for the Australian dollar to give us the best defence possible and to create jobs here locally as well. It does not matter whether the submarines are wholly and solely built here or whether there is a mixture of building overseas and installations here—whatever it comes out to be—so long as it is the best result for the Australian taxpayer and for the defence of our nation.

I find it so ironic when Senator Conroy says, 'Here's the Senate report,' and yet, when I instigated a Senate inquiry and we gave a unanimous recommendation from all sides of politics, the previous government did nothing. As I said, that was on the situation of insolvency practitioners where we have such a farcical system in many respects. People are overcharging and the little creditors—the Aussie battlers, as I call them—are getting less than 10c in the dollar for 96 per cent of liquidations. What did the Labor government do? They did nothing.

Amazingly, when those opposite were in government the percentage of GDP for Defence spending was the lowest since 1938, prior to the Second World War. Yet here they are lecturing us on what we should be doing as far as establishing, maintaining and growing our Defence mechanisms and assets here in our nation. I find it amazing. This is a situation where those opposite suffer so much amnesia. They have simply forgotten what they did in government and here they are lecturing us on getting it right. They have always got it wrong when it comes to managing money. That is a history that they are known for right throughout the nation. We as conservatives have the job to clean up their financial mess, as we will do.

Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make a contribution to what tragically appears to be another broken promise in the making by this government of twisted priorities. I rise to talk about the issue of the submarine program. Yesterday we had the economics committee's inquiry into naval shipbuilding release its second interim report, which focuses on Australia's Future Submarine project. I am privileged to be a member of the committee. The committee heard from well-respected and senior industry experts on the importance of our submarine building industry. They overwhelmingly told us that that building, maintaining and sustaining our new submarines in Australia is in our country's long-term economic and national security interest.

The government has argued there would be a capability gap if a tender process were undertaken rather than their intended option of buying off the shelf. Over the course of the committee's public hearings, we heard from expert after expert that a competitive tender process should not be bypassed. Importantly, evidence to the committee also made clear that, if the government moved now to conduct a competitive tender process, Australia would not suffer from a submarine capability gap.

But you do not have to take my word for that. What did the experts say on the need for a competitive tender? We have heard reference to Dr John White here today. He is a well-recognised expert in the field. He said:

There are significant technical, commercial and capability gap risks invoked by prematurely and unilaterally committing to a preferred overseas, sole-source supplier.

The Hon. Martin Hamilton-Smith, South Australian Minister for Defence Industries said:

It just beggars belief that you would go with one provider without testing the market.

Mr Chris Burns, Defence Teaming Centre, said:

You will never know the true potential cost of a project until you get multiple companies to put their names to dollar figures on firm tender bids.

And what did these experts say on the supposed capability gap? Dr John White said:

There is still sufficient time available, with adequate contingency, for the competitive PDS to be carried out and to build the Future Submarines in Australia.

When visiting our submarines in Adelaide I was filled with an overwhelming sense of pride at what we are capable of building, right here in Australia. As witnesses at the inquiry said, we can and we should continue to build and maintain our submarines in Australia. There are a number of experts who made similar comments. Mr Malcom Jackman, Defence SA, said:

A vibrant and sustained naval shipbuilding industry of all shapes and forms is vital to our self-reliance.

Retired Commodore Paul Greenfield said:

The future submarine should be designed specifically for Australia and built here in Australia. A sail-away cost of $20 billion for 12 submarines built in Australia is entirely feasible, and Australian industry has much to offer in solving the truly unique engineering challenges.

Mr Chris Burns, Defence Teaming Centre, said:

Australian industrial tenacity and innovation turned the project around to the point where we now operate among the most capable conventional submarines in the world.

It seems the government have tied themselves into strange knots in their wildly varying positions on this issue.

At times, the dissenting report from the coalition senators contradicts itself. In one part it argues against a competitive tendering process due to lack of government oversight:

In theory a competitive tender process can lead to the lowest price for government and potentially value for money. In practice, the contractor almost always has more information than the government about the costs and risks of a project.

But then later on in the dissenting report they argue for a competitive process; then they argue against more oversight:

Imposing direct managerial oversight by government would be counter-productive to maintaining these competitive efficiencies.

Australia's future submarines are one of Australia's largest ever defence acquisitions and will be crucial for our national security for decades to come. I have visited the Collins class submarines at ASC in Adelaide and, unlike this government, I could not help but be impressed and incredibly proud of what we are capable of building in Australia.

The experts are on board; the industry and the public are on board. It is time the government got on board. (Time expired)

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

I will start by following on from Senator Ketter's comments. I do not think he quite understands the point we were making in the dissenting report. It is not that the coalition senators were against competitive tendering per se; it is just that those on other side are very naive about how contracting works in these situations.

All they are arguing for is competitive tendering now, before a contractor signs; they are seemingly not concerned with what happens after a contract is signed. That is sometimes more important in situations such as this when you are looking at multibillion dollar deals—very complex and technical information. You must be sure about creating that competitive tension, or some kind of cooperative arrangement after a contract is signed. The majority report is silent on those issues.

Clearly the other side do not get these issues. I note that Senator Conroy was saying that it would be a national disgrace if we followed our approach. But the only disgrace would be if we continued on with their approach. The Labor Party's approach was to cut the budget of Defence by $16 billion. The Labor Party's approach was to do nothing on these decisions for years, to make no decisions. In the evidence we got in the committee, the Labor Party made a big deal that they would spend millions of dollars on the submarine project, and all that did was create reports; more and more reports but no decisions on submarines needed for our future defence needs.

Senator Ketter said there was some contradiction in the government senators' report. Actually I think there is a glaring contradiction in the majority senators' report. We just heard from Senators Conroy and Ketter how we need to have this 'open and competitive tender process'. And Senator Conroy is nodding—we need an open process. On page XIV, of their report it says:

Given the evidence provided to the committee, particularly in relation to the inadequacy of the current Japanese Soryu submarine to meet Australia's needs, there does not appear to be any benefit in reopening this option for further consideration.

So they have decided. We have decided—

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

Don't misrepresent!

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

That is a direct quote, Senator Conroy.

Stephen Parry (President) Share this | Link to this | Hansard source

Order!

Senator Conroy interjecting—

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

You want an open and competitive process but you do not like the Japanese. What is wrong with the Japanese?

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

The Japanese can tender.

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Conroy, you have had your contribution.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

Senator Conroy, there is something wrong. We heard questions earlier today on other matters; they are worried about the Chinese too. They are worried about the Chinese and the Japanese. Over here, we look to our north and we see opportunity: we see the ability to trade; we see the ability to have our defence needs met. Over there, all they see is risks and threats. They are the negative party about Asia and they are not willing to connect with it.

What is wrong with the Japanese sub? We have had four hearings, I believe, on the submarine side of this report. We have heard from a few people. Yes, some of them are experts in their field. But we have not heard the evidence to make judgements like that, and that is why we need to remain open-minded about other options.

The other thing their report did not do was quote Mr Warren King. They spent their whole executive summary, which is the reasoning behind their recommendations, and they did not quote from Mr Warren King once. Mr Warren King is the CEO of the Defence Materiel Organisation. He is responsible for the running of this project. I think all senators would agree that he gave authoritative and expert evidence to the committee. But they provided no evidence. In our report we did quote from him. Mr King was asked about what he found or what the situation was when the government changed. He said: 'I was worried about our lack of progress on Future Submarines over many years. I was worried about how we were going to break the deadlock of the—'

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

But you have done nothing for 14 months.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

'I was very worried about how we were going to come up with solutions to meet Australia's needs.' That was from the CEO of DMO.

Senator Conroy interjecting—

Stephen Parry (President) Share this | Link to this | Hansard source

Order, Senator Conroy!

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

Apparently Senator Conroy does not take the CEO of DMO as expert evidence. Clearly they did not want to quote from that particular witness, but we know why: because he belled the cat on exactly what was left by the former government. But they refuse to acknowledge that now.

There is another thing they refuse to acknowledge. We never hear anything from the other side about what we really need when we make these decisions. What we really need is a very clear focus on making the decision based on our defence needs. That is how we should make this decision. We should be looking at what we need to meet Australia's future defence needs and evaluating it on that basis. They want to stand outside inquiries with the workers, they want to shout solidarity, but they never really come to the crux of the matter that this is a multibillion-dollar decision for the future of our nation's defence. It is too important to be left to the Labor Party.

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

Mr President, today I asked a question today about one of the Abbott government's many broken election promises that threatens jobs in South Australia, and that question of course was about budget cuts to the ABC. And now I am going to contribute to the debate about yet another broken election promise, and that is the failure of the government to honour its commitment to the people of South Australia to build the 12 Future Submarines in my state of South Australia.

I have spoken about this before—about how before the federal election the then shadow minister for defence and the Prime Minister wrapped themselves in the Australian flag and promised South Australians that the 12 new submarines would be built at the ASC in Adelaide; and how straight after the election the government started looking around to purchase those submarines from overseas. The government tried to paper over its broken promises by making outrageous claims about the capability of the workforce at the Australian Submarine Corporation. The government fudged the truth about the improving productivity about the AWD built at Submarine Corp. as well. The government tried to hoodwink the people of South Australia into believing that buying an off-the-shelf submarine from overseas would meet our capability and our security needs and would be cheaper than building in Australia, a claim that it made without any pretence of testing those premises by doing what should be done, and that is entering into a proper, competitive tendering process. Then, faced with a backlash from the people of South Australia, who do not like being lied to, and faced with a revolt within its own ranks of South Australian senators and members—

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

They have gone missing now.

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

Yes, they have gone missing, Senator Conroy, that's for sure—the government had to keep coming up with excuses for reneging on its election promise. Now it's only argument is that if something is not done soon there will be a capability gap at Submarine Corp. that will not be able to be bridged. However, even this fig leaf that the government is now using to cover up its broken election promise has been revealed for what it is—a cover-up.

Yesterday, as we heard earlier on, a report of the Senate economics references committee was tabled in the Senate. That clearly debunks that idea that the government is clinging as it tries to justify breaking its promise to the people of South Australia to build the Future Submarines in my state. The Senate inquiry heard evidence from expert after expert after expert who demolished the government's arguments about the lack of competitiveness, about the quality of Japanese submarines versus Australian submarines, and about the ability of the Australian workforce to build and maintain these submarines. When asked about the potential for a capability gap if the submarine project does not come online in time to ensure the workforce and skills needed to build the subs in South Australia are retained, the committee heard from genuine experts like Commodore Paul Greenfield, Rear Admiral Peter Briggs and Dr John White who all said that there does not have to be a capability gap if we get on with the competitive tender process now. These are the experts to whom we should be listening. For example, as we heard at the inquiry, Dr John White, the expert chosen by the government to review the Air Warfare Destroyer project said:

There is still sufficient time available, with adequate contingency, for the competitive PDS (Project Design Study) to be carried out and to build the Future Submarines in Australia.

Or, at the same inquiry, retired Commodore Greenfield, who said:

There does not have to be a capability if we get on with it now.

And we should be getting on with it now. That is what the Senate Economics References Committee report that was tabled yesterday clearly states. It is very disappointing that Liberal senators who participated in that inquiry are backing away from the recommendations in that report to get on with it, to start the competitive tendering process so that we can fulfil the government's promise to build those submarines in my home state of South Australia.

Even Mr Martin Hamilton-Smith, the minister for defence in South Australia, a former Liberal himself, has seen the light. He clearly stated to the Economics References Committee that he believes the submarines can be, should be, must be built in South Australia.

Stephen Parry (President) Share this | Link to this | Hansard source

I gather, Senator Whish-Wilson, your motion is on a separate matter. I will put the first motion. That is, that the motion moved by Senator Conroy be agreed to.

Question agreed to.