Air Warfare Destroyer Project

The Hon. M.L.J. HAMILTON-SMITH (Waite—Minister for Investment and Trade, Minister for Defence Industries, Minister for Veterans' Affairs) (14:07): I seek leave to make a ministerial statement.

Leave granted.

The Hon. M.L.J. HAMILTON-SMITH: Today federal Finance Minister, Matthias Cormann, and Defence Minister, David Johnston, announced the commonwealth's response to a review of the Air Warfare Destroyer (AWD) Project, which was led jointly by former US Secretary of Navy Don Winter and former Transfield chief and current member of the state's Defence SA Advisory Board, Dr John White. The Air Warfare Destroyer Project has faced a number of issues, leading to schedule delays and cost overruns.

The SPEAKER: Could the minister be seated? There is a camera (second from the right) which is using artificial lighting. Thank you for turning it off. Minister.

The Hon. M.L.J. HAMILTON-SMITH: Thank you, sir. While not necessarily unusual for a project of this scale and complexity, clearly the commonwealth is right to take remedial action. As part of its response, the commonwealth has committed to a reform strategy which will:

improve shipbuilding productivity at the air warfare destroyer builder, ASC, and its subcontractors BAE Systems, Forgacs and Navantia;

include the urgent insertion of an experienced shipbuilding management team into ASC; and

after augmented shipbuilding capacity has been put in place, pursue the reallocation of blocks between shipyards to make the AWD more sustainable.

The AWD project has faced a number of issues. Faults with blocks produced in Victoria meant a significant reallocation of work in mid-2011. Another reprofiling of the project was required in 2012. The commonwealth has said they have confidence in the Australian Submarine Corporation—a very important point—who are undertaking work on the AWD project in South Australia, and their board to ensure the project is delivered.

The commonwealth provided additional endorsement for ASC in regards to their management of service contracts for the current submarine fleet. The commonwealth has made it clear that it wants the AWD project delivered. I am confident the South Australian defence industry has the capacity to work with the measures announced today to ensure the project is delivered as effectively and efficiently as possible. As the second largest investor in the program, given the major investment in Techport Australia, South Australia clearly has a significant interest in successfully delivering the AWDs to the Australian Navy.

South Australia remains firm in its partnership with the commonwealth and stands ready to appropriately support any efforts required to ensure the program's success. Could I pay tribute to my predecessor in his role as the former minister for defence industries, who championed Techport and the AWD project throughout his tenure.

Members interjecting:

The Hon. M.L.J. HAMILTON-SMITH: The issues raised today should not just be viewed in the context of the AWD project. It is important that we learn from these lessons and consider all of Australia's future shipbuilding needs. A continuous shipbuilding program would give Australia's defence industry the experience and capacity to avoid the sort of problems that have occurred with the AWD project in the future.

As I have already flagged publicly since becoming Minister for Defence Industries, it is important to ensure the commonwealth develops a long-term shipbuilding plan that can cost-effectively support the needs of Australia's navy while sustaining the Australian industrial shipbuilding base. Indeed, the independent review of the AWD project identified this as an underlying systemic issue. Such an approach to deliver consistency and work would give industry a greater level of confidence and ability to invest in Australia.

While this consistency is important to our national defence capability, it will also be important in further enhancing South Australia's mantle as the defence state. As Minister for Defence Industries it is important to me, and to the government as a whole, to provide industry with the opportunity to grow the more than 28,000 defence industry-related jobs here in this state. To achieve this, we are committed to working with industry and the commonwealth government to promote South Australia as the home of shipbuilding in Australia.

Members interjecting:

The SPEAKER: Ah, Father Gapon—sorry, the Minister for Health. Would he be seated. Before I call him, I call him to order, for accepting the congratulations of the opposition about his term as defence industries minister, and I call to order the members for Hammond, Schubert, Morialta and Heysen, and the member for Hartley I call to order and warn a first and second time. Minister for Health.