Defence SA, $28,614,000

Membership:

Hon. J.A.W. Gardner substituted for Mr Basham.

Minister:

Hon. S.C. Mullighan, Treasurer, Minister for Defence and Space Industries.

Departmental Advisers:

Mr R. Carruthers, Executive Director, Defence and Space, Defence SA.

Mr P. Murdock, Director, Finance and Systems, Defence SA.

The CHAIR: Welcome back to Estimates Committee B. Welcome back to the Treasurer with his Defence SA, Space Industries hat on. I declare the proposed payments open for examination. Minister, do you have an opening statement, or, at least, could you introduce your advisers?

The Hon. S.C. MULLIGHAN: Thank you. I do not have an opening statement, but I introduce Reg Carruthers and Peter Murdock from Defence SA.

The CHAIR: Member for Morphett.

Mr PATTERSON: I have no opening statement. I will just get straight into it. If we go to Budget Paper 4, Volume 1, page 154, in the highlights, dot point 1, where it references AUKUS pillar 1, can the minister provide an update regarding the submarine shipyard construction?

The Hon. S.C. MULLIGHAN: Yes. As the member would be aware, the commonwealth made a commitment that there would be a significant expansion of facilities at Osborne. They allocated a figure of $2 billion over a four-year period to undertake that work. Some of that work has commenced. There is other detailed planning work underway as far as we are aware from the commonwealth, but we expect that work to continue ramping up in the coming months and over the course of what was the forward estimates when that $2 million was first announced.

Mr PATTERSON: In terms of last estimates, the former defence industries minister said that they will look to have the construction in phases. Is that still the case, and what are the timelines involved for the first phase?

The Hon. S.C. MULLIGHAN: It is my understanding that, in order to maintain the accessibility of the site and the functionality of the site, they will be looking at doing particular upgrades over the course of the period that the shipyard is to be upgraded. But if you are after a detailed breakdown, we can see what information the commonwealth has provided us and provide that to you, if you like.

Mr PATTERSON: In terms of that shipyard construction, how many workers will be employed as part of that and what are the opportunities for South Australian companies to be involved?

The Hon. S.C. MULLIGHAN: My understanding is the estimate the commonwealth has provided is that the construction of the facilities over the course of the construction period will require 4,000 workers for that task.

Mr PATTERSON: Does Defence SA have any role in assisting the South Australian companies to be involved with that and, if so, what actions are being undertaken?

The Hon. S.C. MULLIGHAN: These construction projects are led by commonwealth agencies, not state government agencies, but nonetheless, Defence SA has been liaising with the Department of Defence to try to assist them to understand what local capability there is in this work.

South Australia has pretty deep experience in assisting the commonwealth defence department undertake these sorts of works. As you would be aware, member, there has been a very significant amount of work done out at Edinburgh over the course of most of the decade, so we do have in South Australia and across our economy some pretty extensively experienced planning and design companies and also civil construction firms that are used to doing business with them.

But while the major contract is still in the process of being awarded, the focus has very much been on scope definition, detailed design and trying to plan out how the works will be carried out.

Mr PATTERSON: On the same page in the highlights, dot point 2, it talks about supporting the South Australian defence industry into the supply chain for the Virginia class. Can the minister explain what programs were provided to support the SA defence industry?

The Hon. S.C. MULLIGHAN: Obviously, the state has participated through Defence SA in the Sea-Air-Space major convention, along with side missions to visit Electric Boat and HII to understand what is required for this very significant commitment. We continue to work with local industry through established networks, both directly and also within the Defence Teaming Centre and other organisations, to encourage participation and involvement in the supply chain.

Member, you might have noticed that there was a specific allocation of additional funding in this year's budget to continue that local industry development in terms of its capacity to participate in the supply chain for this. That work has commenced, but it still has a long way to go. We have provided that funding over a four-year period because there is a significant amount of effort that is required to be successfully deployed between now and the commencement of actual construction at Osborne on the Virginia class.

Mr PATTERSON: In one of the federal strategies—I think the National Defence Strategy—it stated that a critical mechanism is going to be the Defence Industry Vendor Qualification Program, which was initiated by AUKUS partners to help streamline and accelerate qualification of supplies into the United States' supply chains. Has this program been investigated by the department?

The Hon. S.C. MULLIGHAN: Yes, absolutely. I think the purpose of the Premier's recent mission to the United States was to experience firsthand as the leader of the government what skills and capabilities are going to be required for Australian participation in the Virginia class. You would perhaps would have heard him speak about what some of his takeaways from that mission have been.

The reason we have committed additional funding in the budget is because we are aware that it is going to be a very significant challenge for the country and also for South Australia to adequately supply enough labour and also industrial capability to participate in this. It is a challenge we do not want to fail at because this is a platform that involves the expenditure of tens and tens of billions of dollars over a long period of time. If we can best position both South Australian workers and also South Australian companies to be qualified and vetted and participating in the supply chains necessary for AUKUS pillar 1 then that promises an even more substantial boost to the state's economy into the future.

Mr PATTERSON: How accessible is this to small and medium companies, recognising the challenges that companies would face trying to break into the US-based defence supply chain with all the political support that goes behind US-based defence industries from a US perspective?

The Hon. S.C. MULLIGHAN: It is a good point you raise because it is particularly designed around the SMEs that have capability but perhaps not the experience, and getting them prepared for and in front of the relevant procurers of supplies, whether it is goods or services, for the contracts that will be awarded.

I do not want to give the impression that we have bags of time to carry this out, because even though major construction will not start here in South Australia for a number of years, the effort is commencing already for AUKUS partners, as you said in your question, to make sure they have sufficient capability to participate. If it is not South Australian companies that are participating, obviously that opportunity will fall to others, and we do not want those wider economic benefits of the construction work being undertaken here in South Australia to be missed.

That is why we continue to support existing endeavours to try to build the state's economy and its capability in this area. Part of it will be working here in South Australia with those companies, part of it will be trying to assist those companies to become appropriately accredited for work packages and part of it is likely also to be taking companies overseas to meet with key procurers in this area so that they can get to meet them and demonstrate what they have to offer for the platform.

Mr PATTERSON: Is there a similar program to that program I mentioned before—the industry vendor qualification in the US—in place for South Australian defence companies to participate in the UK nuclear submarine supply chain program?

The Hon. S.C. MULLIGHAN: Yes. The idea is that this will not be exclusively an effort that we will undertake in the US. This will be an effort that will also occur in the UK. To that extent, we have also provided some funding for a specific person to be located in the UK to build those connections between existing UK industrial businesses already engaged in the provision of nuclear submarine construction activities, to be introduced to and hopefully engage with South Australian companies.

While we have existing efforts obviously in the Office of the Agent General and existing representation from the Department of State Development, as it is now called, in the UK and in other countries, including the United States, we feel that this warrants a particularly focused effort where somebody can be engaged solely with the task in mind of getting South Australian companies ready to provide goods and services for this platform.

Mr PATTERSON: The Australian government is providing, I think, $4.6 billion to design and build the SSN-AUKUS, and some of that money has included going to the Rolls-Royce facility where the reactor is built. Can the minister advise what are the opportunities for South Australian defence companies to participate in this phase of the project?

The Hon. S.C. MULLIGHAN: They would be both numerous and varied, I would think, because while we do not have companies that are currently knocking together nuclear submarines in Adelaide or in South Australia, we do have a large number of companies that have the experience and capability to provide various services, if not goods, at various points in the supply chain for the design and construction of nuclear submarines.

That could be anything from naval architecture—and I think you and I attended functions this week in relation to the Naval Architecture Conference in South Australia. I think it was the first time that it had been held in Adelaide, and I think there is a view that it may well come back again in the future. Then, of course, we have all the resident capabilities in defence-certified and capable fabrication works, and then everything in between.

What we want to do is give those existing capabilities exposure to the opportunities of being suppliers for the platform and, in addition to that, of course, try to build a much greater ecosystem of South Australian businesses that can participate in the decades to come.

Mr PATTERSON: In the targets on the same page, it talks about identifying and developing industry opportunities, again into the supply chain, for the Virginia class submarines. Why is there not a target to equally look to develop and identify opportunities into the supply chain for the Astute class submarines?

The Hon. S.C. MULLIGHAN: It is not by design, I think. I have just articulated that the budget specifically provides funding to have somebody located in the United Kingdom to try to pursue opportunities, as well as provide overall—I think it is a bit over a million and a half dollars a year to be able to go to both the UK and the United States to promote South Australian capability and companies for the various platforms. It is not a meaningful omission from the five dot points under targets.

Mr PATTERSON: In May, the Australian Manufacturing Workers Union personally targeted the chief of AUKUS nuclear-powered and Collins class submarine builder, ASC, Stuart Whiley. Does the minister see any risks posed to the future of ASC in either shipyard construction or submarine construction because of industrial action or standover tactics?

The Hon. S.C. MULLIGHAN: No, not necessarily. I think in past decades we have not only constructed the Collins class submarines but, as that program was winding down, we won the air warfare destroyer project and, at that time, there was quite a bit of work that went into working with the workforce and their industrial representatives to ensure that South Australia retained its really good reputation nationally as a jurisdiction of low industrial disputation. Given the extensive decades of experience we have in naval shipbuilding, we do not foresee this as being a particular problem or a barrier to continuing our longstanding reputation of being the home of naval shipbuilding for the country.

Mr PATTERSON: Can the minister explain what input Defence SA is having to the Office for AUKUS?

The Hon. S.C. MULLIGHAN: The Office for AUKUS was an initiative that was established in last year's budget. It was an initiative to provide direct support to the Premier really quickly after the AUKUS announcement had been made, and it became clear what South Australia's role in continuous naval shipbuilding was going to be.

That was to not just try to extend or add to the effort that Defence SA undertakes with defence industry development, capability assessment and deployment into these platforms but, more broadly, to try to prepare and coordinate other state government agencies that are likely to have some role in gearing up the state and the Osborne precinct ready for naval shipbuilding.

As a result of some of the work that the Office for AUKUS has undertaken there have been significant land transactions between the state and the commonwealth to provide more government-owned land on the LeFevre Peninsula to Defence so that they can expand the size of the naval shipyard. That was a deal that was reached in part with a land swap, where the government is to progressively take ownership of the Keswick Army Barracks as well as some additional land at the south of the Cultana training facility.

Since then, the Office for AUKUS has also had the role of fine tuning some of the land transfer and associated arrangements with that land at Osborne, for example. You might recall that in recent weeks in parliament we passed a piece of legislation that gave us the capacity to, in very quick order, effect land transfer between the government, the defence department and local government, the City of Port Adelaide Enfield, to make sure we are progressing that.

The Office for AUKUS is not as much outward facing as, say, Defence SA is in terms of trying to enhance defence industry capability. It is to be more of a single point of contact in coordinating effort for state government agency preparations and responses to what we need to do, in various ways, in responding to the commonwealth's needs or requests when they relate to AUKUS.

For example, with that Osborne land transfer example I gave before they had to coordinate Renewal SA, the planning agencies (which are now called some other acronym, HIPDU or something) as well as the involvement of the Department of the Premier and Cabinet and Treasury and Finance to try to be able to respond quickly to this sort of stuff.

Mr PATTERSON: How many meetings conducted by the Office for AUKUS have you attended?

The Hon. S.C. MULLIGHAN: I do not attend meetings of the Office for AUKUS. That is an agency that reports to the Premier as part of the Department of the Premier and Cabinet. However, I try to maintain weekly meetings with Defence SA, which is the agency that is connected to me.

Mr PATTERSON: On reading that, it is Defence SA, the CE or staff, who attend. How many meetings have Defence SA staff attended?

The Hon. S.C. MULLIGHAN: Of the Office for AUKUS?

Mr PATTERSON: Of the Office for AUKUS, yes.

The Hon. S.C. MULLIGHAN: The Office for AUKUS is an administrative unit. It is not a board of management or a board of control. It has a director and it has a couple of support staff. It is there to be a dedicated office attached to the Department of the Premier and Cabinet to singularly deal with, in quick order, requests and requirements that are asked of the state by the commonwealth for things like land transfers and access and other arrangements, as well as providing some support to the Premier for his engagements with federal ministers, like the Deputy Prime Minister and Minister for Defence, Richard Marles, and so on. Defence SA has had a role here for 20 years in South Australia, and it is about trying to secure defence platform opportunities for the benefit of our economy and for defence industry development.

As Reg reminds me, there are distinct areas of work which the Office for AUKUS also undertakes in terms of making sure that we are preparing the correct or any changes to the regulatory environment for the activities which are going to be occurring in the future on the Lefevre Peninsula at the Osborne shipyard and, more broadly, making sure that there is an inputting role to the work that the Department of State Development, led by Adam Reid, is doing for workforce development and so on.

As Reg said, there is a close working relationship between Defence SA and the Office for AUKUS, but there are not Office for AUKUS board meetings or anything like that that require specific attendance.

Mr PATTERSON: It seems from the nature of that there are no actual key deliverables that the Office for AUKUS gives Defence SA. You sit, in a way, on stand-by, waiting for them to make use of defence industry related expertise?

The Hon. S.C. MULLIGHAN: As I was explaining before, we have Defence SA's longstanding role as identifying and pursuing industry development opportunities for the state's defence industry, and of course there are a range of examples where they have carried that out over the last 20 years and done so successfully, whether it is securing the Hobart class air warfare destroyer contract, chasing down the RAAF for their 737 deep maintenance and modification facility, or other large areas of investment from commonwealth defence related organisations.

The job of the Office for AUKUS is to coordinate the efforts of state government agencies to ensure that once we are securing those industry development opportunities all the requirements across a range of different state government agencies are coordinated and executed quickly.

It is not so much outward industry facing; it is more focused on providing internal government coordination support and advice, so that when the commonwealth says, 'Look, we need to square away who is owning that piece of land and how quickly we can get access to it,' that does not sort of bounce around between existing government agencies like Renewal SA, which might be the landowner; SA Water, if they have easements over it which need to be considered, or something like that; the planning department, which has to consider the appropriate zoning arrangements; or Treasury, making sure we understand the impact of the transfer of the assets on various agency balance sheets and overall on the state's finances.

The Office for AUKUS is designed to pull all of that disparate bureaucratic endeavour together and make sure that we can be responsive quickly to these requirements as they arise.

Mr PATTERSON: I refer to the same page, going on to targets, dot point 1, where it mentions development opportunities for the Hunter class frigate program. What impact has the cutting of the Hunter class frigate shipbuilding program from nine frigates to six had on the South Australian defence industry?

The Hon. S.C. MULLIGHAN: Not particularly much, for example, because we are really talking about not significantly reducing a quantum of workforce or drastically changing the supply chain that is required to participate in the construction of that platform. It is about length of the program, in particular. We have built three air warfare destroyers, and that was a very significant effort and achievement for the South Australian defence industry.

Now we are looking at six frigates—so a big, significant step-up—and at the same time we have to carry out the life-of-type extension for Collins class, which is a very large amount of work. We are talking billions of dollars of expenditure that has been budgeted by the commonwealth for that. Then of course we have—this is probably not the right word in defence-speak—the refurbishment of the Hobart class AWDs, which themselves were only recently completed construction in recent years in South Australia.

Our task really is, instead of having one major platform underway, we are now going to have three at various stages and intensities. On the face of it, that should provide a really significant opportunity for South Australian defence industry participants to get involved and hopefully participate significantly in these opportunities. Defence SA's job is to try to fully understand the extent of those opportunities, how the South Australian defence industry matches what those opportunities are, and then try to put those capabilities together with those opportunities so that we can have as many businesses and their employees participating.

Reg reminds me that of course they have also announced the successor, I guess you could say, or new class of the air warfare destroyers, which will also be built as well. While Hunter might have gone from six to nine, there are three new destroyers that have been added onto the program.

Mr PATTERSON: In terms of that reduction, though, has the minister met with or is the minister aware of any defence companies that bid into the program? Their order book would be for nine ships. It has now been reduced to six. Has that impacted on their plans, or have they had to seek other activity?

The Hon. S.C. MULLIGHAN: No, not so much. I have met with quite a few companies both before my time taking on the role and certainly since taking on the role. Different companies have different interests in the opportunities that are available. We are talking about naval shipbuilding. There are South Australian defence companies that have relatively low levels of interest in those opportunities because they are heavily involved in defence materiel exports elsewhere in the defence supply chains outside of naval shipbuilding.

I do not think anyone has expressed to me that they are dismayed that their order book has dried up or that they are losing work. Certainly, the conversations I have had almost exclusively have been predicated on the basis of, 'My goodness, isn't there an extraordinary amount of work coming South Australia's way,' particularly over the next 20 years where we are going to have these three—well, four, in some respects—platforms underway, and how best to take advantage of that incredible step-up in industrial activity that is going to be happening in our state.

Mr PATTERSON: Of course, the announcement around the frigates was part of the service fleet review and the delay and uncertainty that was caused by that. Can the minister outline any impact felt by the defence industry around the delay's uncertainty that was involved with the service fleet review?

The Hon. S.C. MULLIGHAN: Yes, it is a good point. I will go back a step. South Australia was home to the construction of the Collins class submarines from the very late 1980s through the 1990s and then tailing off at the very beginning of the 2000s. When the former Labor government came to power in 2002, the then Premier appointed an economic development board, chaired by Robert Champion de Crespigny. Amongst the early membership of the EDB, their job was to identify future economic opportunities for the state and then marry those opportunities up with where South Australia had a comparative advantage already.

The two that were identified by the EDB—we are talking more than 20 years ago now—were in naval shipbuilding, because we were just winding down the Collins class submarine construction program, and in mining, because, as we all know, South Australia is highly prospective across a range of different minerals and resources.

So, with respect to defence, there was the establishment of what was called the Defence Unit back then, and there was the recruitment of retired Rear Admiral Kevin Scarce, who used to be the chief of Navy procurement, as the best person we could possibly get in Australia who could help us navigate a path towards making it clear that South Australia was the obvious place to be building the air warfare destroyers. The idea of securing the air warfare destroyer project was to establish a workforce and an ongoing capability in naval shipbuilding, so that when it became time to replace the Collins class or make a decision about what submarine platform would replace the Collins class, regardless of what it was going to be it was going to be built in Adelaide.

Of course, only a relatively short period of time after—I think it was 2005 when the AWD contract was awarded—there was a change of federal government in 2007. From 2007 up until the announcement of AUKUS and the selection of the Virginia class, we have had more variations than Floriade in terms of what the submarines were going to be for Australia going forward.

You might remember that we had extensive reviews under the previous Rudd government. Then we had the selection of a Japanese submarine. You might remember the exchange in the state parliament: 'Mazda builds good cars too,' from the former member for MacKillop about the selection of a Japanese submarine. Then that got binned and then there was the question of whether it would be German or whether it would be French, and it ended up with the French Naval Group. Then there was an enormous amount of effort by the previous Coalition government to consolidate around the Naval Group opportunity to build a French-based platform. Then, of course, under the Morrison government, that got canned as well before settling on the trilateral AUKUS arrangement, which then led to the selection of the Virginia class.

I guess the disappointment that South Australian industry has had has not necessarily been within the first 18 months of the Albanese Labor government. It has been in the preceding 15 years of nearly 10 federal governments of both persuasions. There were ever-changing plans for what the submarine platform was going to be.

The reason I gave you that long potted history about the EDB and the Defence Unit and winning the air warfare destroyers is that the whole aim of that endeavour was not just about the AWDs; it was to set us up for the much larger and more lucrative industrial opportunity of building submarines here in South Australia.

I think the frustration is that we have chopped and changed. It was going to be built in Japan and then it was going to be built here. Then it was not going to be French anymore but was going to be an AUKUS platform, and then the AUKUS platform was resolved to be the Virginia class. I think that has really been a frustration—the ongoing changes around the future submarines—and has been the focus of everyone's attention.

Mr PATTERSON: Just changing the page, on page 150 the objectives talk about Defence SA being a single point of contact for all defence and space stakeholders. Can the minister outline which primes you have been able to meet with since becoming Minister for Defence and Space Industries?

The Hon. S.C. MULLIGHAN: I will get you that list.

Mr PATTERSON: Further to that, have you had the opportunity to meet with your federal counterpart responsible for defence industries, the Hon. Pat Conroy?

The Hon. S.C. MULLIGHAN: Yes.

Mr PATTERSON: What was the outcome of the meetings?

The Hon. S.C. MULLIGHAN: There was a shared commitment to ensure that South Australian defence industry participants can win as many opportunities as possible out of these platforms, which will be delivered progressively not just in South Australia. We have a lot of companies that have long and deep experience in exporting from South Australia, either to other parts of the country or overseas.

Much as we have been focused on naval shipbuilding in the course of this discussion, we both agreed that we should not lose sight of what is happening more broadly across the defence industries. I took the opportunity to raise with him that South Australia remains committed to trying to foster space industries here in South Australia, and do that for the benefit of the nation, because we realise, as I think you have canvassed, that there have been decisions taken at a federal level where funding that was previously committed by a previous federal government has no longer been made available and that has caused a great deal of uncertainty for participants in the space industries that were hoping to see further investments from the commonwealth.

I was also at pains to highlight that, whilst the Defence Strategic Review contained a significant repositioning of the Australian Army, including the withdrawal of the 1st Battalion from South Australia, we will still have a presence of the Army. We will still have a presence of the Army here. As I mentioned in my earlier answer, we have been expanding our efforts to support the RAAF's operations and maintenance arrangements with the DMMF that is being established at Edinburgh for the P-3 replacements, the 737 platform.

Given that that is being built, that will be by definition a very modern and up-to-date facility, and we are keen to explore what other opportunities we have to support the Air Force in those areas. While aircraft may be based, located or operated from different parts of the country, we have the facilities, capability and the longstanding experience to be playing a role supporting the RAAF, and in turn providing significant industrial opportunities for South Australian companies.

Mr PATTERSON: Moving on to page 152 in the Investing expenditure summary, where it talks about the Space Assembly Integration and Testing facility, which is the repurposed Australian Space Park. Originally the Space Park was funded $20 million from the state, $20 million from the federal government and $26 million from the four industry participants. Since the last budget, the federal government has confirmed that it is withdrawing that $20 million—it was still up in the air last budget. Can the minister outline what actions have been undertaken, now that it has been repurposed, to try to regain that $20 million of federal funding?

The Hon. S.C. MULLIGHAN: As I said in my previous answer, I certainly flagged this with Minister Conroy. It is not necessarily his portfolio responsibility because he is focused on the defence industries, and space and related investments are more considered to be under the bailiwick of Minister Husic. I did not want to miss the opportunity of making that point to Minister Conroy that there is a lot of overlap in terms of industrial participation and capability between areas of the defence industry and the space industries.

While we recognise their regrettable withdrawal of funding for that particular initiative, we are going to maintain our effort and our funding on the table. We have done that in a slightly different way where we have made that $20 million available to have, as you pointed out in the description in the budget papers, the assembly and integration centre at Lot Fourteen, while we are still continuing to support the development of the Adelaide Airport-located facility ostensibly around Fleet Space's operations there. Then, more broadly, outside of those two projects, we continue to try to support space industry participants to develop and win more work.

Mr PATTERSON: Construction is estimated to start this financial year. Do you have a month when you are looking to start it?

The Hon. S.C. MULLIGHAN: I will have to come back to you with a specific month on that.

Mr PATTERSON: Further to that, it says in that investing expenditure summary that the estimated completion date is quarter 2, 2029. Can you explain why it is not estimated to be completed until such a long period of time afterwards?

The Hon. S.C. MULLIGHAN: This is a common feature of how capital projects are reported in Budget Paper 4. Those estimated completion dates are sort of project close-out dates rather than the completion of major construction or from building handover or access. For example, up until I think it was last financial year or the financial year before, we had the Northern Expressway project still mentioned in Budget Paper 4 because, even though that road has been opened for more than 10 years, there is still ongoing works required by contractors in terms of landscaping and drainage and all that kind of stuff, which does not actually interrupt or halt any use of the asset.

My understanding is that that very late estimated completion date is not when the facility will become available for tenancy and work; it is more related to a project close-out date. But if there is anything else I can provide on that, I will take it on notice and come back to you.

Mr PATTERSON: By that answer, when is the estimated operational date when companies can start using—

The Hon. S.C. MULLIGHAN: If I have to come back to you on the month of construction commencement, perhaps in that same answer I can come back to you with a date on construction completion.

Mr PATTERSON: Much appreciated. I talked about the four anchor tenants in the original proposal and the lead proponent being Fleet, which you mentioned as well in the answer. Can you confirm then that Fleet will not continue their funding commitment into the AIT facility? They have gone it alone, have they?

The Hon. S.C. MULLIGHAN: As your questions alluded to and as you probably recall, the idea was that the facility at Adelaide Airport would be like a multiuser facility or a common-user facility and that there would be Fleet and then a number of other participants. My understanding is that Fleet are continuing to proceed with their facility at Adelaide Airport. Some of the other proponents that were going to partner with them in that facility I think have chosen not to continue.

What we are hoping is that, by having a government-built facility with government funds, this would provide them with the opportunity to come and participate at Lot Fourteen if they are not going to participate at Adelaide Airport.

Mr PATTERSON: One of those companies you mentioned that have withdrawn from it, AtSpace, are no longer part of the project. They are also trying to launch some test rockets over at Whalers Way for Southern Launch. To be fair to you, I did not finish part of it. They had a program of three launches. They tried to get one launched. They subsequently decided not to proceed with the other two and left South Australia. Have you been in contact with them as to the reasons why? Are there opportunities for them to relocate back to South Australia?

The Hon. S.C. MULLIGHAN: You will recall that the company that has actually got the lease over the land at Whalers Way conducted a successful launch further along the west coast at Koonibba and that was a very high profile and successful launch. They are trying to get the requisite planning approvals for Whalers Way. I think it is fair to say that there are elements of the local community on Eyre Peninsula that are not particularly supportive of the Whalers Way location. I also think the member for Flinders has been on the record in the house about some of his constituents' reservations about this.

This is an area that has access but is largely undeveloped and requires approvals under the federal Environment Protection and Biodiversity Conservation Act, so they are not able to continue launches there without that approval. We are trying to get an understanding of how quickly that is going to be considered.

Obviously, we cannot influence their decision. It has to be taken independently according to the merits of the application, but we are trying to get some certainty about the timing of the decision because if it ends up—and I know that the EPBC process can be notoriously long—taking too much of an extended period of time, it is going to make it very challenging for the company to continue trying to maintain cash flow and progress pursuing Whalers Way and they may have to consolidate their efforts at Koonibba.

That is not the end of the world for them. There is a market for launches at Koonibba, as they have already demonstrated, but there are particular attributes to the Whalers Way launch facility that enable them to do what I understand to be called polar launches, where they can send satellites up into the sky to orbit the poles of the earth. That provides very unique satellite coverage that is not available from other launch sites in other parts of the world.

If they can unlock Whalers Way, what has been described to me is that there is a very significant economic opportunity where we could see launches of a large number of satellites over a sustained period of time from all sorts of countries to improve their access to all the facilities that satellites provide. It is not just telecommunications and military surveillance, but crop surveillance and natural disaster surveillance and emergency services surveillance, let alone all the other testing and data tasks that satellites also have. The company I was referring to was Southern Launch. It slipped my mind.

Mr PATTERSON: We have sort of wandered off a bit, but in terms of Southern Launch, the former minister for space industries has been quoted as saying about the location at Whalers Way:

I have serious concerns about the impact of this development on rare species and valuable habitat, and the risks it may pose for fire and damage to adjacent marine life.

That is her statement and you were talking about the lengthy delays that could cause Southern Launch to not be able to use that site because of cash flow. You have had AtSpace leave the state. They were highly prospective to have rocket launch here and that then makes satellite manufacturing much more viable because you can launch. My question to you as the new Minister for Defence and Space Industries would be: what is your level of support for the Southern Launch Whalers Way site?

The Hon. S.C. MULLIGHAN: I would hope that it is assessed under the EPBC Act and they can see fit to give it an approval. They are not going to do that if it is going to be causing significant damage to precious environmental vegetation or fauna of course, but if they form a judgement that it is not going to cause the significant harm that the Deputy Premier quite rightly highlighted is a concern and is the trigger for an assessment under the EPBC Act, then what has been made clear to me is this could be a really significant economic opportunity for our state.

You quite rightly made reference to, if people are launching satellites from South Australia maybe it makes sense to build them here rather than have to fly them or ship them over to our country. It is really expensive for people to be launching satellites or rockets. You have teams that have to fly in from not really other parts of the country but other parts of the world. They have to be accommodated. They have to be fed and watered. They have to get around, and they bring with them all sorts of equipment and facilities that have to be stored as well. So on the face of it, you would really like to see this thing be able to succeed, but it has to pass that environmental hurdle first.

Mr PATTERSON: So not only AtSpace, which was involved in that initial consortia for what has now been repurposed the Australian Space Park, but also Q-CTRL, which is involved in quantum, have decided to set up their base at the Sydney tech precinct. So we have had two companies that were going to be here and be quite influential leave. With that in mind, what actions are you taking as minister to ensure that South Australia maintains its first mover advantage here for space companies to set up and thrive?

The Hon. S.C. MULLIGHAN: I think we enjoy a couple of competitive advantages that other places around Australia do not enjoy. I have not been briefed on the particular reasons why that company that you mentioned might have moved interstate, but they are probably not going to be launching from that site, and if they are interested in launching for polar orbit they certainly will not be launching from there.

Of course, as Reg would know better than me, we have a long history of rocket launching and testing in South Australia from Woomera. We have not just an experienced industry but a supply chain which is experienced in this area, so we are ideally positioned for a range of reasons. Even though you might think it is a task to get out to Koonibba, that Koonibba launch site is an activity which is done in conjunction with the Koonibba community. That, I am advised, has support from the local community, including the Indigenous community, and they are participating in providing services for the launches themselves.

Certainly, my advocacy on behalf of the South Australian space industry is to point out the comparative advantages that we have over other parts of the country, as well as the advantages we have over other locations around the world for wanting to undertake this activity. Given the history of our defence industry in South Australia all the way from WRE through to British Aerospace Systems through to BAE and all the other companies that are now involved in this, we have decades and decades of experience of testing and launching projectiles, and I hope we can take best advantage of it.

The CHAIR: This is the last question.

Mr PATTERSON: The original space park was quite substantive, having $40 million that was meant to be put into the equipment, and it was geared around that assembly and the integration testing, so it is good to see that has continued. Effectively, it has been scaled back—halved. In terms of the impact on companies being able to then utilise that and to help them to establish themselves in space supply chains, specifically big defence projects as well, what other measures are you taking to help space companies in South Australia to get up and involved in space-related defence projects?

The Hon. S.C. MULLIGHAN: That is a good question. I am not sure that the facility at Adelaide Airport has been halved because what has also happened at the same time is that Fleet Space undertook their very public capital raise. I think they raised over $300 million. I will check this and come back to you with the particulars, but my understanding is that they were able to tip more money into the development of that facility than what would otherwise have initially been committed to by them.

We are obviously building the assembly and integration centre at Lot Fourteen, and then there are a range of financial supports which the state government is making available. We have the support for third-party efforts like the Venture Catalyst Space program, we have the SA Space Collaboration and Innovation Fund, and then we have, I guess, that coordinating effort with Defence SA and the federal government agencies which still maintain funding streams for research and development activities in which space companies can participate. The Defence Science and Technology Group has its biggest facility here in South Australia.

Since I became minister I have met with Dr Monro, who has made it clear that they have a fairly significant research agenda ahead of them where they are going to look to try to invest funds around the country and in partnership with industry participants, so part of the other effort is more of that soft effort in making sure that we are getting those capable companies in front of those still-existing federal government funding opportunities, and helping them to make their best case to win some of that funding as well.

The CHAIR: Thank you, minister. I declare the examination of the portfolio of Defence SA and Space Industries completed. The examination of the proposed payments for the administered items for Defence SA is adjourned until Wednesday 26 June. I thank the minister and his advisers for coming in today, and I thank the committee. The committee stands adjourned until tomorrow at 9am.

At 15:17 the committee adjourned to Friday 21 June 2024 at 09:00.