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

My question is to the Minister for Finance, Senator Cormann. Can the minister update the Senate on how the structural reforms to ASC announced today will support Australia's record naval shipbuilding investment?

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

I thank Senator Fawcett for that question. Before answering it, though, may I join with my good friend and valued colleague the Leader of the Government in the Senate, Senator Brandis, in congratulating Senator Farrell on his elevation to the Deputy Leader in the Senate position in the Labor Party.

The government today announced that ASC will be structurally separated into individual shipbuilding, submarine sustainment and infrastructure businesses. This ensures that ASC has the best possible structure to pursue future shipbuilding opportunities and support the government's naval shipbuilding objectives. The infrastructure company will hold and manage significant upgrades of shipbuilding and infrastructure assets to support future shipbuilding and submarine programs. In this context the government recognises that the Adelaide shipyards are strategic national assets, including the South Australian government's Techport. The Osborne Precinct will play a key part in facilitating naval shipbuilding in Australia over the long term. Discussions with the South Australian government will ensure that both the state government and the Commonwealth government are aligned to ensure a cohesive approach to naval shipbuilding. This reflects a new approach to key elements of Australia's naval shipbuilding infrastructure to promote Australian capability and protect our national interests.

The shipbuilding company will employ the skilled shipbuilding workforce and complete the air warfare destroyer project, which is on track for delivery consistent with the timetable in the budget announced in December 2015, and the submarine sustainment company will employ the submarine sustainment workforce and sustain Collins class submarines. These structural changes will not impact ASC employees' terms and conditions and it will help ensure that ASC is in the best possible position to pursue future shipbuilding opportunities and support the government's long-term plans for the Australian naval shipbuilding industry.

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

Senator Fawcett, a supplementary question?

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

Could the minister outline the next steps as part of the ASC restructure?

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

I thank Senator Fawcett for his supplementary question. Along with the board and the executive of ASC the government will commence work immediately to begin the structural separation. The government will enter into discussions also with the South Australian government on the future of the common user facility at Techport to ensure a cohesive approach in support of future naval shipbuilding projects. The Minister for Defence Industry and I have written to the South Australian Premier on this matter and we look forward to productive and fruitful discussions between the Commonwealth and the South Australian government in the near future. The current board of ASC will continue to operate across the separated entities under the leadership of the ASC chair, Mr Bruce Carter. Over time the corporate structures and governance arrangements will be aligned to the future requirements of the three individual business. The government expects the final separation to be completed in 2017.

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

Senator Fawcett, a final supplementary question?

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

Can the minister outline how these changes will further support the improved performance of ASC with the maintenance of Collins and delivering the air warfare destroyers?

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

(—) (): Our government has worked closely with ASC since we were elected to get the air warfare destroyer project back on track. As a result of the government's reforms to the air warfare destroyer program it remains on schedule and on budget, as per previous announcements made by the government, and the program has seen significant improvements in terms of cost, performance and labour productivity. We expect delivery of the first ship by June 2017, delivery of the second ship by July 2018 and delivery of the third ship by December 2019. It is also worth noting that Collins class sustainment is going exceptional well, with submarine availability consistently exceeding the targets set by Navy. The ASC noted in a press release today that they had effectively been operating separate submarine and shipbuilding businesses for the last two years. The chair, Bruce Carter, commented that this operating model has been a major contributing factor in the company's turnaround in the Collins class submarine and Hobart class air warfare destroyer programs— (Time expired).