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

by leave—I move amendments (1) to (7) on sheet 2289 together:

(1) Title, page 1, (lines 2 to 4), omit ", the Inspector-General of Defence Capability Assurance and the Parliamentary Joint Committee on Defence", substitute "and the Inspector-General of Defence Capability Assurance".

(2) Clause 4, page 3, (lines 27 to 31), omit the paragraph beginning "This Act also".

(3) Clause 5, page 4 (line 10), omit "the Parliamentary Joint Committee on Defence", substitute "a Parliamentary Joint Statutory Committee with oversight over defence".

(4) Clause 5, page 4 (lines 11 and 12), omit the definition of Committee member.

(5) Clause 9, page 8 (lines 15 and 16), omit paragraph (d) of the paragraph beginning "The Agency's", substitute:

(d) reporting to the Defence Minister and a Parliamentary Joint Statutory Committee with oversight over defence.

(6) Clause 19, page 15 (after line 27), at the end of the clause, add:

(4) The Defence Capability Assurance Agency must, on behalf of the Commonwealth, ensure that the person or entity who has entered into an agreement with the Agency under subsection (1), in maintaining, developing and regulating workforce and infrastructure standards as mentioned in subsection 11(2), does not inhibit effective competition for the defence industry sector to deliver services required by the Agency in the performance of its functions.

(7) Part 4, clauses 73 to 103, page 46 (line 1) to page 65 (line 5), to be opposed.

I'd like to thank my colleagues in the committee. I recognise the chair, Senator Ciccone, and his participation and leadership of the committee, as well as Senator Chandler as the deputy chair.

As colleagues have spoken both today and previously, there are many people in Defence who work extremely hard to bring about good capability. But what we have seen over too many years is that there are pressures that either lead to risk not being assessed at all or not being assessed by people who are qualified to do so. Therefore decisions that are made are not made on a basis of an accurate understanding of technical and scheduled risk not only to safety but also to operational effectiveness. Thirdly—and I think possibly the worst case—where the ADF does have qualified test agencies who do an assessment and make an adverse finding, those reports are sometimes set aside, proactively dismissed or challenged with alternative unqualified reporting to give a project manager or a capability group the opportunity to still progress the project in accordance with the schedule that they wish. That has a significant impact, sometimes on safety and often on capability.

Through the inquiry into this bill, we received a number of submissions—some public; some in camera—which went into some detail about the fact that this is not only historic with things like the Seasprite—probably one of the worst procurement failures in Australia's history—where this kind of deliberate ignoring of technical advice was at the root of that failure, but there are some projects that are quite current that had the same characteristics. That's despite a number of ANAO reviews and parliamentary reviews into Defence's test and evaluation process which has resulted in a flurry of new process. There is so much process that you could exceed the weight margins of a future frigate with the extra paperwork that's been generated! What we see is that it's not applied consistently and it's not resourced. Even where it is applied, it's often not listened to.

That's the purpose of this bill: to provide for the fact that assessment of risk could be done by people who are qualified to do so, that they will be suitably resourced and that their reports will be transparently available not only to the capability managers in the project but to the senior decision-making committees in Defence; and, importantly, also to the Minister for Defence and, therefore, to the National Security Committee of Cabinet; and to an oversight committee appropriately tailored in terms of the disclosure of information, so that there can be a transparent understanding across all levels of decision-making as to what the risks are and whether they are acceptable, whether they need to be managed or, in some cases, whether projects should be cancelled. Those are important things to get right. This bill seeks to do that.

I would welcome the government considering—and the government and Defence have acknowledged that there are problems in this system and that there are things that need to be rectified. The internal reform efforts that have been attempted in Defence under both sides of politics for a couple of decades have not proven to be effective or sustainable. I think we need the approach that's been taken by our allies in the US of creating an independent statutory body that doesn't duplicate but that actually utilises to better effect available existing resources and grows new resources that are competent and capable for the job at a time when global circumstances indicate that the risk of conflict is greater now than at any time since World War II. If ever there were a time when we needed to make sure that every dollar spent was spent effectively and every month procuring, training and operating was spent effectively, now is that time. That's why there has been time management applied to this bill today—so that it will be brought to a vote and can move from here to the House. I would encourage the government to look seriously in the House as to how we move forward and rectify a longstanding problem that has both degraded the operational effectiveness and the safety of defence equipment and, in far too many cases, has cost the taxpayer unnecessary billions of dollars in waste, where risks and technical issues were identified early but disregarded because people didn't want their projects to be derailed. So this is an important bill.

During the committee process, we heard from a range of stakeholders. There were also some changed circumstances. The two amendments that I am putting forward deal with some of that feedback from stakeholders and one of those changed circumstances. Part of the design of the bill is to have parliamentary oversight and so it originally established a parliamentary joint committee on defence in a similar way to the intelligence and security committee is created through the Intelligence Services Act and has oversight of agencies with classified information and detailed briefings and insight. The government, in response to a report of the Joint Standing Committee on Foreign Affairs, Defence and Trade, undertook to establish a committee that, whilst different in name, for all intents and purposes was comparable in terms of function. So, rather than duplicating the effort there, one of my amendments here removes that section of this bill, recognising that the government's committee which they have undertaken to create this year will actually perform that function. Of the amendments (1) to (7), a number of those are consequential amendments that need to occur to the bill because that committee has been removed. The main effect is the removal of the parliamentary joint committee on defence.

The second concern that was raised by stakeholders on one of the aspects of the bill is that if we want people to be competent in the conduct of technical risk assessment and operational risk assessment then we need to (a) have standards and (b) audit the people who get appointed to the roles and their ongoing professional qualifications, training, development and conduct to make sure they are consistent with those standards. We do this elsewhere in the Defence Force—very successfully, I might add—with the Director of Aviation Safety setting standards and then making sure that, whether somebody is Army, Navy, Air Force or a contractor, they meet the standards before they are appointed to a role and they are audited for their ongoing compliance against those standards.

The bill recognises that one of the shortfalls in defence has been a lack of consistency in the ability to retain the depth of knowledge to have a body to set such standards and it looks to engage an industry partner to do that. There were some concerns raised that perhaps that could lead to monopolistic behaviour, and so the second amendment here is placing additional obligations on the board of the Defence Capability Assurance Agency to ensure, both by the legislation and in the change to the explanatory memorandum, that they consult with service providers broadly across industry to ensure that the due diligence and the checks and balances they put in place are effective but also trusted by the industry sector to know that this will set a high standard, but it will be in no way monopolistic in practice. That will go a long way towards helping this agency to be effective and to not duplicate resources but also to be a catalyst for the development of further uniformed and therefore operationally experienced people with the training and qualifications in test and evaluation who can play their part in expediting capability and procurement decisions within defence because people know they can trust the assessment of risk. With that, I table a supplementary explanatory memorandum.

David Shoebridge (NSW, Australian Greens) Share this | Link to this | Hansard source

The Greens support each of these amendments, largely for the reasons articulated by Senator Fawcett. If you just wanted a very short summary about why it is essential that, if not this bill, some other statutory mechanism to deal with defence procurement is urgently passed by the parliament and implemented by the government, you could just repeat the words 'Hunter class frigates' and the disaster that is the Hunter class frigates procurement. You could look at the sorry history with the Seasprites, as Senator Fawcett pointed out. There was extraordinary waste and delay in that procurement process by Australia. It was eventually cancelled because apparently they don't work. Meanwhile, New Zealand picks them up, and they've been working just fine at a fraction of the cost that Australia was going to procure and maintain them for.

If you wanted to finish it off with two further current procurement disasters, we could look at a government that has spent a billion dollars or more buying Taipan helicopters. There was institutional resistance within Army aviation to that for the last 20 years. There were internal fights and pushbacks. A range of highly controversial modifications were put on them. Now we're going through a very opaque process, for reasons that haven't been articulated by the government, of stripping them down, cutting them up into small pieces and burying them in the outback somewhere. From one view, that's the Greens defence policy: we take a whole lot of weapons of war, we cut them up into pieces and we bury them in the ground! That the Greens defence policy: we take armaments out of the world, and we disarm the world. But the process, the rationale, the decisions and the incredible waste that we've seen from government in that process—do the government say that's good? Do the government say it's all fine? Do the government say their internal controls are actually working?

If you wanted the last bit of icing on the cake: something as simple as an offshore patrol vessel, a grand patrol boat. Procure an offshore patrol vessel, don't put any weapons on it and then tack on some kind of second-hand gun—because you've gotta have a gun. Nobody thinks it's going to work. I was just checking: the first OPV, the SA Arafura, was launched—it's not a big boat—in December 2021. Do you know when Defence think they may have it in commission? Did I mention that it just has one second-hand gun on it? They think that sometime this year they might get the first patrol boat into commission. A patrol boat! An offshore patrol vessel! It was launched at the end of 2021, and they might get the first of them into commission by the end of this year. Nobody quite knows what they're for, anyhow. Nobody can quite work out what they're for. They don't have an identifiable purpose. Maybe they can chase fisherfolk in the north. Heaven knows how much we've spent on that.

If not this bill, then what? For the government to come and say they've got internal reviews, they've got this internal process and the people that have created the problem—Secretary Moriarty has got this in hand? Sorry, Secretary Moriarty OBA, SEQ, SPT—I can't remember how many honorifics he's got now through that self-perpetuating honours cycle that the defence department and the services put themselves through. Secretary Moriarty has got this in hand, has he? Yeah, sure.

Jenny McAllister (NSW, Australian Labor Party, Assistant Minister for Climate Change and Energy) Share this | Link to this | Hansard source

I want to put on record the approach that the government will take in relation to the amendment we're presently debating but also the amendments foreshadowed by Senator Shoebridge. We'll be opposing them, and I wanted to set out the reasons briefly. I understand that Senator Fawcett and his office have consulted and briefed Minister Conroy and his office about the bill and the approach more broadly. I want to acknowledge that and acknowledge the constructive way that you have engaged with the government about the bill.

As Senator Brown explained on behalf of the government in the second reading debate, the government supports the intent of this bill. Capability acquisition and sustainment decisions should be appropriately informed by test and evaluation. However, the government is already acting to address the issues that this bill seeks to solve, and the way this bill seeks to pursue these objectives would lead to a suite of negative consequences. In particular, the creation of new agencies runs the risk of duplicating functions, of spreading already finite and limited test and evaluation resources, of increasing existing workforce pressures, of undermining accountable officers' ability to ensure that systems and capabilities meet Defence requirements, of increasing Defence budgetary pressure and of creating a monopoly, as it allows a large company to regulate test and evaluation standards in a niche area where only a small community has the capability to understand all the detail, Given these potential consequences, the government unfortunately cannot support this bill.

The amendments proposed by Senators Fawcett and Shoebridge do not solve these underlying concerns, so the government is not in a position to support those either. However, I reiterate the point I made earlier that the government supports the intent of the bill. Robust capability assurance is essential. The concern is that this bill will interrupt good progress being made by our government towards reshaping the culture within Defence and our long-term plan to build a sovereign test and evaluation enterprise.

The former government had almost a decade to fix test and evaluation, and they never seriously put forward the ideas in the bill. Thanks to our government's interventions, reforms are in place to improve test and evaluation in Defence. Minister Conroy and the government welcome discussion with senator on how to deliver elements of this bill within existing bodies.

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

The thing I love about the committee process in the Senate is that you do get the opportunity for exchange across the chamber, and I thank the minister for her comments, but I do recognise that they are largely repeating the same talking points that Defence used and has obviously provided to the government about their concerns around the bill, and I want to comment briefly on those.

In terms of the accountable officer piece, if you look at Defence's evidence to the committee, they highlight that accountable officers need accurate test and evaluation in order to fulfil their duty. History has shown that, despite numerous reform efforts under both sides of politics over a couple of decades, those internal reforms have not led to a consistent and transparent communication of risk to those accountable officers. This bill takes best practice from our AUKUS partners so that accountable officers can in fact discharge their duties consistently and effectively.

So, the objection that the minister has raised, which echoes that raised by Defence, doesn't recognise the purpose of the bill and the reality of what has occurred in Defence over decades. So Minister, thank you for the very gracious way you said that, but it's actually not technically correct. Nor do I have any confidence that yet another round of internal reform within Defence will allow those accountable officers to make informed decisions based on risk.

In terms of the duplication, that's another claim that was put forward by Defence through the inquiry process. But, as some expert witnesses highlighted, this statutory body embraces and utilises existing resources more effectively through coordination, supervision and training, and then the outcome is transparently reported. That means it's more effective than having groups spend half their time fighting for resources, trying to have their voices heard. Defence and almost all the witnesses highlighted that there is a deficit of suitably trained people in uniform. And the witnesses were united in their comment that this agency was the best opportunity for Defence to grow an experienced and sustainable test and evaluation workforce.

So the expert advice from witnesses, including some people who are very senior in Defence in terms of their careers, was that this agency, far from duplicating and making things inefficient, would actually make existing resources more effective and efficient and would be the basis for growing a more sustainable base going forward.

On the monopoly side, I have consulted with some industry players who gave evidence about what the committee is looking to put forward through this amendment, and they agree that this amendment satisfies their concerns and that they have no concerns about the potential for monopolistic behaviour given that the Defence Capability Assurance Agency is a Commonwealth agency. The standards are set as a service by a company contracted engaged to do that, but the agency is what is engaged with industry if more capacity or particular expertise is required from industry that the ADF or Defence can't provide.

Minister, thank you for your contribution, but I want to note that each of the points you've listed come from the talking points from Defence, which have been quite comprehensively rebutted through the committee process and the evidence presented. I repeat my request that the government not just adopt a static position of opposing the bill but embrace the principles and see how we can work to create something that is actually appropriately skilled and appropriately independent and that reports within an appropriately transparent effectiveness everywhere through the chain of decision-makers involved in defence procurement and materiel.

David Shoebridge (NSW, Australian Greens) Share this | Link to this | Hansard source

It's mystifying to me why the government is opposing these amendments. The government says it opposes the bill but the amendments put forward by Senator Fawcett greatly reduce the scope of the bill, so you'd think that would be the thing. Also, the only material change it makes other than reducing the scope of the bill is to put in an express provision that ensures competitiveness. Now, why would the government oppose that? I know those were the minister's speaking notes, but what possible rationale does the government have for opposing amendment (6) on Senator Fawcett's sheets, which is purely designed to ensure there's not anticompetitive behaviour in the process? You may not like the overall bill, but why on earth would you oppose amendments that reduce the scope of a bill you don't like and that put in something that is expressly designed to protect competition in the space? I know the speaking notes have come from the minister's office, but the problem is that the minister's office doesn't seem to add any value to the speaking notes that he gets from the department.

That's kind of the problem here. There seems to be no distinction between the government and the department. Minister Marles is just a cipher for whatever Secretary Moriarty and the department tell him; there's no value added. Why wouldn't the minister's office have had a look at this and had some kind of independent view about it? What's the point of having a minister if all they do is transmit what the department says without any critical analysis?

In term in terms of opposing the Greens' amendments—I will speak briefly to foreshadow what our amendments are. Amendment No. 1 requires in the procurement sector that Defence have regard to Australia's international human rights obligations and also to the public interest. Why on earth is the Labor Albanese government opposing an amendment that says that, on defence procurement, there should be regard to Australia's international human rights obligations and the public interest? Why doesn't the Albanese government want the public interest considered on procurement? Why doesn't the Albanese Labor government want Australia's international human rights obligations considered on defence procurement? International human rights obligations come up all the time—for example, cluster munitions and land mines. Why would you oppose that? I know those are the notes that the minister in this place has and it's probably what defence has, because they have a reflexive opposition to stuff, but what possible value did Minister Marles add? On what basis is Minister Marles directing the government here to say, 'No, we don't want to consider international human rights obligations and we don't want to consider the public interest in procurement'? Why oppose that? It's bizarre. It's irrational. Or it's just a dangerous lack—everything is done by remote control. Literally, why are Minister Marles and his office there if they don't critically consider this?

The other amendment that the Greens put forward—and I still can't understand why it's being opposed—is to ensure that, before there's an agreement between the defence capability agency and an entity or a person, all reasonable steps are taken to ensure there's no conflict of interest. Why oppose that? Why is the Albanese Labor government opposing a provision that's aiming to get conflicts of interest out of defence procurement? Again, I don't blame the minister here. They've got speaking notes that have been given to them by Minister Marles. But what is Minister Marles doing opposing that amendment?

Again, I don't think there's any value added in that office. It no doubt just came from the department. 'Oppose it. Here's a random set of speaking notes. We've got it under control. We're doing a review. Don't you worry about it. We'll get the patrol vessel commissioned maybe by the end of 2024 or maybe by 2025. We'll get a Hunter class frigate together by—oh, we'll come back to you on that. We're chopping up the helicopters and burying them in the outback. It's all under control. It's all fine. We've got reviews. It'll all be fine.' Why have a defence minister if that's what they do? Why be there? I ask the minister: can you articulate why you're opposing the coalition's amendments, and can you give a rational, considered reason about why you're opposing the Greens' amendments?

Dorinda Cox (WA, Australian Greens) Share this | Link to this | Hansard source

The question is that amendments (1) to (6) on sheet 2289 be agreed to.

Question agreed to.

The TEMPORARY CHAIR: I'll put the second part of the amendments on sheet 2289. The question is that part 4 stand as printed.

Question negatived.

David Shoebridge (NSW, Australian Greens) Share this | Link to this | Hansard source

by leave—I move Australian Greens amendments (1) and (2) on sheet 2325:

(1) Clause 11, page 12 (after line 18), at the end of subclause (4), add:

; and (d) have regard to Australia's international human rights obligations; and

(e) have regard to the public interest.

(2) Clause 19, page 15 (after line 18), after subclause (1), insert:

(1A) Before entering into an agreement with a person or entity under subsection (1), the Defence Capability Assurance Agency must take all reasonable steps to ensure that the person or entity does not have any interests (pecuniary or otherwise) that could conflict with the proper performance of the functions in paragraphs (1)(a) to (c).

I just want to reiterate that amendment (1) requires Defence to have regard to Australia's international human rights obligations and the public interest in procurement. We think that's important. For reasons that haven't been articulated, the Albanese Labor government is opposing that. It's bizarre, but that's the situation. Amendment (2) requires that, for any person or entity who enters an agreement with the Defence Capability Assurance Agency, there must be assurances there are no conflicts of interest. Again, we think that's important, but for reasons that I can't understand the Albanese Labor government is opposing that too. Maybe they've changed their mind; we live in hope.

Question agreed to.

Bill, as amended, agreed to.

Bill reported with amendments and an amendment to the title; report adopted.