Stirling Griff (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

My question is to Senator Payne as the Minister representing the Minister for Defence Industry and is in relation to the future submarine project. On 23 May 2016, then industry minister Pyne told ABC's Q&A program:

We are involved in a proper commercial negotiation with DCNS as the builder of the submarine. DCNS has admitted that probably less than 10 per cent of the work will be done outside Australia.

Now, most people regard a local build as about 60 to 70 per cent, so in fact that is very good news for Adelaide and Australia. Minister, noting that DCNS, the builder of the submarine, is happy with a 90 per cent Australian build, can you confirm that 90 per cent is the minimum starting point in negotiations currently on foot with DCNS?

Marise Payne (NSW, Liberal Party, Minister for Defence) Share this | Link to this | Hansard source

If I am not mistaken, that is Senator Griff's first question, and I thank him very much for that. I am clearly on a roll; I appear to have the NXT trifecta over the last two weeks of sittings!

Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Don't get cocky!

Marise Payne (NSW, Liberal Party, Minister for Defence) Share this | Link to this | Hansard source

No—no chance!

As I advised the Senate a fortnight ago, I am not going to address the details of the Commonwealth government's most important commercial negotiations, which are underway right now. That is not the correct approach to take to an important commercial negotiation on that matter. But what we will do, and what I have consistently said and what the defence industry minister has consistently said—and the Prime Minister—is that we will adopt an ambitious approach, a positive approach, in relation to the engagement of Australian industry and Australian content in order to maximise it. Indeed, I note that the CEP was designed to maximise Australian industry involvement.

I also advise the Senate that Defence has concluded further discussions with DCNS, with agreements reflected in a deed of commitment from DCNS which was signed on 20 July this year. Last Wednesday I met with the French defence minister, Jean-Yves Le Drian, in Paris to discuss Australia's Future Submarine Program and the establishment of a very strong government-to-government framework to ensure its success. I also met with the chairman and chief executive officer of DCNS, Herve Guillou, and deputy chief executive officer Marie-Pierre de Bailliencourt to discuss the company's preparations to begin work in Australia. I am pleased to say that the Future Submarine Program is on schedule. Defence and DCNS will partner to begin designing Australia's future submarine later this year.

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

Senator Griff, a supplementary question.

Stirling Griff (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

Minister, are you saying that Minister Pyne was wrong? Given the importance of maximising local content, especially in my home state of South Australia, wouldn't it make sense to use DCNS's 90 per cent local content as at least the starting point to negotiations?

Marise Payne (NSW, Liberal Party, Minister for Defence) Share this | Link to this | Hansard source

I think, if the senator checks the record, there will be no indication Minister Pyne was incorrect. And as I have previously said, as I reiterate again today, the government has directed the Department of Defence to maximise Australian industry involvement, engagement and capability throughout the entire Future Submarine Program. That was, as I said in my previous answer, one of the key objectives of the competitive evaluation process.

The government, through the defence white paper and the Defence industry policy statement, has put in place the necessary framework and initiatives to ensure that we maximise the opportunities for small and medium-sized enterprises to engage with Defence—through things like the Centre for Defence Industry Capability, which will be underway in Adelaide imminently—and to contribute to programs like the Future Submarine Program, which as we have noted before will generate more than 2,800 jobs right across Australia.

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

Senator Griff, a final supplementary question.

Stirling Griff (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

I note, Minister, that you are not willing to put a percentage on the amount of local content. However, the competitive evaluation process went for more than 12 months, and that process examined the Japanese, French and German proposals. That obviously would have required consideration of the implications of a hybrid overseas and local build. How is it that the government have done such a detailed analysis, but you will not commit to a minimum percentage of local build?

Marise Payne (NSW, Liberal Party, Minister for Defence) Share this | Link to this | Hansard source

Again, I would advise the senator that the government is involved in a sensitive commercial negotiation process, and I am not going to ventilate on the Senate floor the ins and outs of the sensitive commercial negotiation process. I am not going to ventilate it in the media. I am not going to ventilate it in any inappropriate way.

As I have said, we have taken from all of the proponents—but most particularly, as we are discussing, DCNS—Australian industry involvement plans, which were a key part of the competitive evaluation process for all of the submitters. That and working to ensure that the details of extensive engagement with Australian industry are part of our work with the French, and working with potential key suppliers, which will form the basis of Australian sovereign sustainment capability, are a very important part of the work that we are doing. DCNS themselves have begun a comprehensive process to engage with local Australian industry from all over the country to provide details of how they can join— (Time expired)