Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

On behalf of the Minister for Defence, Senator Payne, I table the ministerial statement on the Defence white paper and seek leave to have the statement incorporated in Hansard.

Leave granted.

The statement read as follows—

Government ' s Defence policy settings

o The transformation of the Indo-Pacific region and the relationship between United States and China;

o challenges to global order;

o the dangers of state fragility;

o the pace of military modernisation;

o and threats in cyber space.

Capability

International Engagement

Industry

People

Reform

Conclusion

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

I move to take note of the Defence white paper and I rise to respond to the release of the 2016 Defence white paper. I wish to thank the Defence minister, Senator Payne, for graciously providing Labor with an advance copy of the Defence white paper on the day of its release. I also wish to thank Senator Payne for her agreement at Senate estimates a few weeks ago, which she has reconfirmed to the chamber, to convene a Senate committee hearing in the coming weeks specifically on the white paper.

After two prime ministers, three Defence ministers, three assistant ministers, two parliamentary secretaries and a 12-month delay, we genuinely welcome the release of the 2016 Defence white paper. As senators will be well aware, Labor is committed to bipartisan approach to national security and defence matters. Based on our initial review and in the spirit of bipartisanship, we are broadly supportive of this Defence white paper. We welcome its strong support for our alliance with United States as a foundation of our national security and defence arrangements. We also welcome its focus on increased engagement in the Indo-Pacific region, building on the work of Labor's Defence white papers in 2009 and 2013. We agree with a strong emphasis that the 2016 Defence white paper places on the importance of the rules based international order and, although it must be said that the government continues to avoid questions about whether it will act to support the international system in the South China Sea, Labor also supports in principle the government's decision to deliver on its promise of raising Defence funding to two per cent of GDP, but we will examine the specifics of the government's spending plans in more detail over the coming days.

We are pleased that the government is acknowledging and maintaining Labor's hard work on cyber security, especially our work in establishing the Australian Cyber Security Centre. We are broadly supportive of the decision to increase ADF personnel to 62,000, because we believe that the men and women of Defence are our single greatest asset, but we remain concerned that the deep cuts this government has made to Defence's civilian workforce. These cuts mean that ADF personnel could increasingly be forced to backfill civilian staff positions. We also call on the government to live up to the commitment in the white paper to retain people by paying personnel properly and maintaining their conditions and entitlements, after this government shamefully cut the pay and conditions of our serving personnel just over 12 months ago. We welcome the white paper's commitment to ensuring that Defence Housing Australia continues to provide high standard housing that delivers the best outcomes for ADF members and their families, but we again call on the government to make a firm commitment to retain Defence Housing Australia in public hands now and into the future.

While we are broadly supportive of the Defence white paper, it is not a perfect document and it fails to deliver on key Abbott-Turnbull government promises. The government has finally admitted that Labor was right in our 2009 and 2013 Defence white papers that Australia needs 12 submarines, but it has still not lived up to its promise to build them in South Australia, notwithstanding that the government is currently running ads—Senator Whish-Wilson, you will be amazed by this—on radio, saying, 'The Liberal government has delivered 12 subs in South Australia.' They are running them today—how extraordinary! Notwithstanding that the Defence white paper says no such thing, it has not lived up to its promise to build them in South Australia. The government is proudly trumpeting its continuous shipbuilding plan but the reality is that this government has failed our strategically vital naval shipbuilding industry. Under this government over 1,500 shipbuilding jobs have been lost across the country, with shipyards in Victoria and New South Wales now on life support. The government has also failed to make a decision on whether the submarines will be built in Australia and refuses to reopen the supply ship tender for Australian companies to compete, despite not making a decision after 20 months—and this one was urgent! It has walked away from Mr Abbott's promise to build the first few offshore patrol vessels in South Australia, putting at risk a further 1,300 jobs. I know that Senator Fawcett is very concerned about this, but I cannot believe he has put his name to these ads making the claim that they have already delivered the subs in South Australia. I have not known him well for that long, but that is barefaced even at his blush.

It is disappointing that in releasing the defence white paper the Prime Minister has chosen to revert to discredited claims about former governments. I simply make the point that the ABC's Fact Check has rebuked the claim made by Mr Turnbull that under Labor defence spending dipped to its lowest level since 1938. That is the statement. That is what they keep saying over and over again. Indeed, Fact Check found that defence spending dipped to 1.62 per cent in 2002-03, under former Prime Minister Mr John Howard. So all of these claims about 70 or 80 years are complete rubbish.

As I said at the start of my remarks, Labor is committed to a bipartisan approach to national security and defence matters. In the spirit of bipartisanship we are, as I have said, broadly supportive of this defence white paper. I again thank Senator Payne for her willingness to provide Labor with an advance copy of the 2016 defence white paper and I look forward to the opportunity to discuss the white paper in more detail in coming weeks at the Senate committee hearing that Senator Payne graciously agreed to recently during estimates.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Senator Conroy, you guys should get a room. I will tell you what the Greens are committed to doing. We are committed to asking the hard questions. We are committed to asking the hard questions that we know a lot of Australians want answered. With this white paper we have a totally unexpected significant boost to defence funding—two per cent of GDP is being quarantined; there is a $30 billion increase in defence expenditure with no overall increase in the threat assessment as outlined in the white paper document itself. As a country we have made a stark choice here—we have decided to spend taxpayer dollars on weapons companies, on arms manufacturers and on military hardware when we could have spent that money on other things in this country that we desperately need. It is a fundamental principle that every single dollar we spend on defence is a dollar we will not have to spend elsewhere. There is an opportunity cost that comes with the expenditure of each and every dollar. Our job as parliamentarians, and as politicians, is to question this expenditure and make sure it is being spent the right way, it is being spent on the right things, and that it is providing the best, pardon my pun, bang for our buck.

I do not see the Labor Party asking these hard questions. I do not see them doing the job of being the opposition on the biggest ramp-up of military expenditure this country has seen in decades. That is the role of an opposition—to ask the hard questions, especially on something as fundamental as spending money on defence. We have seen tensions in the South China Sea, there is no doubt about that, but ever since I can remember we have seen tensions there—especially around the Spratly Islands. There have been a lot of reports on this lately, and I understand that Mr Kevin Andrews, the previous defence minister, even suggested in a media interview last week that we should send some of our naval vessels within 12 nautical miles of those disputed islands—presumably to see what happens.

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

Didn't we go with the global rules-based system?

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

You can talk about global rules-based situations, but what happened with our deployment to and invasion of Iraq in 2003? So much for global rules-based engagement. Today I mentioned the Japanese whaling fleet, ignoring the global rules-based system. It is a furphy for us to justify an obscene expenditure of money on weapons companies on the back of a very rubbery threat assessment of the South China Sea.

The next question is how exactly this is going to aid our country's defence. I know there are issues here with the alliance, and that is probably what this is all about, but the Greens do ask the questions about the kind of military hardware we are looking at here, whether it is necessary for the defence of our country. There are a couple of issues I would like to highlight. There are extra Defence personnel. I am involved in an excellent committee inquiry into the mental health of Defence personnel at the moment, and we will be releasing our report within the next few weeks. I hope we have good tripartisan cross-party support for that report, because Senator Conroy is right about one thing—our Defence personnel are absolutely critical. I know that nearly 50 per cent of our current ADF personnel have been on multiple deployments to Afghanistan and Iraq and other places, and they are suffering heavily because of this. There is a lot more we can do for them. It concerns me that suddenly we have outlined an increase of 5,000. Is that because we are going to continue having multiple deployments overseas? That has not been answered. Drones have been a very controversial if not effective military hardware in the so-called war on terror. What do we need drones for? To defend Australian territory. Are we investing in drone technology because we are going to fly them around Australia's territory or because we are going to participate using drones in foreign theatres of war such as the Middle East? Once again it raises questions about our priorities for defence versus offence.

Most importantly—I think I speak on behalf of a number of Australians and my colleagues—this white paper is industry policy dressed up as military expenditure. The Greens do not have any problem at all with government participating in industry policy, providing the right incentives and the expenditure to create employment, to drive innovation, to lead more prosperous communities and to invest in infrastructure. The argument and debate we are not having is how best to do that. What we are doing here without any opposition from the Labor Party is giving the government the green light to spend $30 billion on weapons companies and arms manufacturers, when that $30 billion could be spent on fixing the infrastructure gap in this country.

I have been going around the country on a couple of inquiries by the Rural and Regional Affairs and Transport References Committee into regional capitals and by a select committee into infrastructure funding. If we invested in fixing the infrastructure gap the kind of money we are outlining—a trillion dollars spending on defence over 12 years—we could set this country up for the next 100 years in not just every capital city but every regional city. Believe me, there is a trillion dollars of underinvestment in infrastructure in this country. For the price of $80 billion on submarines we could totally set up Australia for a 100 per cent renewable energy, for a clean energy future and create thousands of jobs.

There are so may things we could be investing this money in, but it is interesting that we do not have that debate in this parliament right now, because the Labor Party have absolutely no point of difference on this critical issue of a massive two per cent of GDP that has been quarantined for defence. One thing I have learnt here is that there seems to be a reticence, almost a culture of fear and silence, from parliamentarians and politicians on the issue of defence and defence spending. On where the money is spent, which state is going to build the submarines or the new destroyers or the new frigates, on that kind of thing I have seen hours of questioning on the logistics of procurement, but I never see the strategic decisions being questioned by parliamentarians. It is quite fascinating.

We have an inquiry coming up shortly into the Joint Strike Fighter, a $25 billion acquisition for the Department of Defence. I am hoping the Senate will ask a lot of hard questions on the public record so that all stakeholders can see these things answered. Everybody gets their chance to answer these things, to dispel myths if that is the case from the proponents. But at least we will have had an attempt to question a massive strategic acquisition of military hardware. Will we get such scrutiny from Senator Conroy on whether we need these submarines? I do not think so.

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

We do.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

We do. There you go—he has already made his mind. They will cost $80 billion. Do we really need 12? We have already had criticism from Andrew Nikolic MP, who is now in charge of the national security committee. He was happy to stand up and have a go at your decision to make 12 submarines as being some kind of Kevin Rudd madness. Do we really need 12? I have not seen any debate on that. I have not seen any active debate from anyone on why we need 12 submarines. I have seen a lot of debate on where we are going to build them, and we have not built them yet and they had better be built in South Australia, but I have not seen any questioning of the strategic need for 12 submarines.

The numbers that have been labelled in the defence white paper are very rubbery. There is up to 50 per cent variance on individual projects. Defence can spend between $3 billion and $5 billion on this and between $2 billion and $3 billion on that. These very rubbery figures could potentially lead to a lot of wasteful spending and a lot of too-big-to-fail projects if we are not careful. We have to ask the hard questions. They have not been asked on this defence white paper. (Time Expired.)

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

I want very briefly to congratulate the minister, Senator Payne; the previous minister, Senator Johnston; their departments; the service chiefs; and, indeed, all in Defence on the production of this white paper. Can I suggest to Senator Whish-Wilson that if he were interested in these things, perhaps he should join the Joint Foreign Affairs, Defence and Trade Committee, where we get some briefings about the need for various upgrades to defend our country and to bring peace and stability to our region. Ministers of course get far more sensitive and in-depth briefings than the joint standing committee but attendance at that committee would answer some of the concerns that Senator Whish-Wilson raised.

I want to indicate publicly my appreciation for the importance shown in the white paper of Defence as it relates to Northern Australia. Quite clearly any attack, unexpected and unthought about as it should be, would come from the north. The areas where our Defence forces would play a smaller but important role and even a humanitarian role are in the north of the country. I think it is important that the white paper has recognised that and has, as a result, announced quite a deal of immediate and longer term spending across the north of the country. I am disappointed that there has been no commitment made by the Navy chiefs to move the capital ships out of Sydney Harbour and put them a bit further north in Townsville, Cairns, Darwin and Broome, where I think they will be better located. That is a battle I have lost so far, but it will not stop me.

I also recognise the emphasis in the commentariat and in many debates here about building naval ships in Adelaide versus Western Australia and Melbourne. I am just hopeful that the case for building the Pacific patrol boat fleet in Cairns has the merit that I believe it has and that the government will very seriously consider a return of patrol-boat building to Cairns, supporting a shipbuilding industry that regrettably failed because of deliberate decisions by the federal Labor government and the Queensland state Labor government.

Across the north, the white paper details at some length very significant capital expenditure on the Defence estate, improvements to any number of airbases and army bases, the setting-up of unmanned surveillance units in Townsville and, indeed, far too much for me to go through in the very limited time I have. But there is considerable spending in the north which will—and this is not the purpose of it, of course—significantly help local economies across the north. Even if the principal contract is not given to northern firms, but I hope it will be, certainly all the subcontracted and ancillary support for the quite significant spending that has been announced across northern Australia will be a real boost to the economies of Townsville, Cairns, Darwin, Mackay and all the places in between.

That is so very important at the moment because of the downturn in the mining industry, which has affected so many who support small businesses. While the Greens are opposed to and the Labor Party are ambivalent about encouraging sustainable mining operations in the north, the unemployment problem which we currently have in the north has been exacerbated in my home state of Queensland by the absolute inaction of the current Queensland government. This defence spending will be a real fillip to the local economy.

So all congratulations to Senator Payne and her team on this white paper. I do think it sets the way forward in a very constructive, positive and, as far as Australia is concerned, safe way that will mean that our defence forces are well provided for and well supported into the future.

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

The 2016Defence white paper sets out a medium- to long-term defence strategy based on reasonable hypotheses about the future, like the geopolitical outlook. There are a number of good things in the pages of the document which are welcomed, and I join my colleagues in congratulating the defence minister, Senator Payne—and indeed Senator Johnston as the former minister—and of course those within Defence for the work they have done.

But I do feel obliged to raise the serious concerns I have around submarine building and naval shipbuilding. Whilst recommitting to 12 future submarines is welcomed, there is not much else for Australia's shipbuilding industry or taxpayers to sing about in the defence white paper. Starting with submarines, the white paper failed to rule out an overseas or hybrid build of the boats, thereby failing to uphold the coalition's pre-election promise to build them in South Australia. It beggars belief that the government is still considering exporting the better part of this $50 billion project overseas.

Moving on to naval shipbuilding, there are two 'knowns' in the white paper. The first is that Australia's three air warfare destroyers are currently being built in Adelaide. They will be all but completed in 2018. The second is that the future frigates that will replace the current Anzac class frigates will commence their build in 2020. Between the wind-down of the AWD, something that has already commenced, and the spin-up to the future frigate sometime after 2020 lies the so-called 'valley of death' in shipbuilding jobs. The valley will reach its nadir between 2018 and 2020, when ASC shipbuilding will have what their CEO described at a recent Senate estimates hearing, in answers to questions from Senator Wong, as essentially a 'skeleton workforce'. From 2018 onwards, there will only be about 100 shipbuilders remaining. That is a skeleton workforce.

This is bad not just for the current employees of the company that will be out of work and, with all the other multiplier effects, for subcontractors but for Australian taxpayers as well. In 2013, Defence penned the Future submarine industry skills plan, in which Mr Warren King had a key role, which recommended we avoid a 'valley of death' at any cost. It stated in its executive summary:

The impact of rebuilding from a low base for the current Air Warfare Destroyer and Landing Helicopter Dock ship projects was substantial and expensive.

It went on to say:

With the cost of all planned naval projects being somewhere above $75 billion, a proficient and productive shipbuilding industry would produce overall savings to the Defence budget in the tens of billions of dollars.

Again, in 2015, the RAND Corporation stated in its study Australia's naval shipbuilding enterprise:

The premium to build in Australia could be lower than the 30 to 40 percent range if Australia adopts a continuous build strategy to avoid rebuilding an industrial and management capability with each new ship program, starts with mature designs at the onset of production, and minimizes changes during production. With such measures (and a cultural shift in industry toward continuous improvement), we can envision this premium being cut in half.

So there are efficiencies in the tens of billions of dollars for taxpayers in relation to that.

A very superficial analysis is that it is a bit like putting together modular furniture! Mr Deputy President, if you have ever been to IKEA and bought some flat-pack furniture, it takes you forever to put it together the first time around, if you are like me. Even if you can put it together, once you have done it two, three or four times, by the fourth time you are a whiz at it and you have great efficiency in putting it together. In some respects, it is the same with shipbuilding or any form of manufacturing. This is evident in the results achieved in the air warfare destroyer program. At a recent Senate committee hearing, the CEO of ASC revealed that, at 71 per cent completion, ship 2 was coming in at 39 per cent less than the cost of ship 1; and, at 46 per cent completion, ship 3 is coming in at about 50 per cent of the cost of ship 1. We are now losing that capacity through the government's approach to naval shipbuilding—a patchwork approach.

There is a requirement for the Navy to build 12 offshore patrol vessels. On 4 August 2015, the then Prime Minister, the Hon. Tony Abbott, travelled to Adelaide to announce a continuous build program. To avoid the 'valley of death', he stated:

The frigate build will certainly start in Adelaide. That doesn't mean that other yards can't have a role, but certainly the Corvette—

the OPV—

build is likely to start in Adelaide. It will stay in Adelaide until the frigate build starts in 2020 and then it's quite possible that the Corvette build could shift.

But it appears that the Turnbull government has rejected that solution.

Australia needs to take a strategic approach to naval shipbuilding and sustainment. In order to benefit from the efficiencies and productivity advantages that a continuous build approach is predicated on, the continuity must occur in the one location. The only sensible strategy is for naval ships to be built efficiently and well in the one location in Adelaide and for the sustainment work, which is considerable over the 30-year lifespan of a ship, to be carried out at the RAN's operational bases at Sydney, Perth, Cairns and Darwin. That is what must happen for the sake of taxpayers, for the sake of efficiency and for the sake of avoiding the 'valley of death'.

The coalition may respond to this by suggesting that it was the Labor Party not making any decisions on shipbuilding that caused the valley and that they are just living with the consequences. There might be some element of truth to what they are saying, but it is not the entire truth. The government has had opportunities to plateau the valley, but has not taken them. It excluded Australian shipbuilders from tendering for the Navy's future supply ships. The government claimed that Australian shipyards could not do the build, but this statement is at odds with the ASC's unsolicited proposal in 2013 to build three supply ships for the price of two.

A supply-ship build would have stemmed the loss of skilled workers that is happening as I speak. Unfortunately for those workers, these shipbuilding jobs have been exported, using Australian taxpayer funds, to South Korea or Japan. Secondly, it occurred when the government down-selected the Pacific patrol boat solution to either Cairns or Perth based companies. That job could have gone to Techport in South Australia and plateaued the valley. The government failed to do that.

The defence minister mistakenly suggested that the defence white paper gave Australia's shipbuilders certainty. That is not correct. After two years of waiting for a white paper that would clear the uncertainty, the plan announced last Thursday simply perpetuated it. We are left with a mountain of uncertainty overshadowing a valley of jobs death in naval shipbuilding in this country.

Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

The question is that the motion moved by Senator Conroy be agreed to.

Question agreed to.