DEFENCE INDUSTRY

Mr MARSHALL (Norwood) (14:36): My question is to the Premier. Given the Premier told the house earlier this afternoon that South Australia has 25 per cent of Australia's defence sector employees and 25 per cent of Australia's defence expenditure, what will be the further effect on jobs in South Australia created by the federal Labor defence budget cuts of 10.5 per cent this year and $5.5 billion over the next five years?

The Hon. J.W. WEATHERILL (Cheltenham—Premier, Minister for State Development) (14:36): That is not precisely how I expressed it. It is 25 per cent of the nation's defence procurement, but it does translate into a very substantial proportion of jobs for South Australia. Just so those opposite do understand the nature of the effect of the delay of the air warfare destroyers contract and the effect that that has on employment levels, it is a relatively small delay in the order of three, six and nine months depending on the nature of the three forward air warfare destroyer programs, and the effect that it has is that across those various projects as they were otherwise going to be able to ramp up employment, it allows one to smooth the employment effect, so essentially there is no employment loss—

Mr Marshall: Only you could put a positive spin on a delay.

The Hon. J.W. WEATHERILL: Well, this is the accurate answer which has been advanced by the defence minister. I happened to be—

Members interjecting:

The SPEAKER: Order!

The Hon. J.W. WEATHERILL: I happened to be—

Mr Marshall interjecting:

The SPEAKER: Order, member for Norwood!

The Hon. J.W. WEATHERILL: I happened to be standing next to the defence minister as he read in detail from the scheduling that will occur in relation to these projects and, if he had paid any interest at all to his portfolio responsibilities, he would know that a key issue in relation to this issue is the question of—

Mr Marshall: Speak to the sector, Jay. Speak to the sector.

The Hon. J.W. WEATHERILL: The sector—if he had listened to the sector, he would know that one of their key—

Mr Marshall interjecting:

The SPEAKER: Member for Norwood, order! You have asked the question. You will listen.

The Hon. J.W. WEATHERILL: If he paid any attention to the sector, he would be aware that one of the key issues they advance is the so-called valley of death—that is, the gap that exists between one project finishing and another project commencing—and that was destined to occur in relation to the end of the air warfare destroyers contract and the beginning of the future submarines project.

Members interjecting:

The SPEAKER: Order!

The Hon. J.W. WEATHERILL: The commonwealth has chosen to deal with that issue and also assist them with their budget imperatives by smoothing out the future profile of the air warfare destroyers project in a way which is intelligent, meets their imperatives around budget and assists us in terms of not losing capability. This is not a trivial matter. Once people are laid off their employment, they obviously seek work elsewhere. They are highly skilled people and so they would be lost to the South Australian community if there was this gap, and that is not just simply a matter of attracting new people back into the sector. It goes to the question of the quality of work that is done.

When this occurred before when they were gearing up for the air warfare destroyers contract, they found that the capability simply did not exist in some states. That is why we are doing rework on a range of BAE work that was done in Melbourne because they did not have the capabilities, so it has come back to South Australia because of those very issues. We are trying to avoid that drop off in capability that can occur when a contract does not meet up with another, and that has been achieved through this process. The truth is that, because of the nature of the defence spend and because of the relative success of the South Australian government in attracting that defence spend into South Australia, the effect of the budget cuts by the commonwealth is relatively modest in relation to South Australia.