Ministerial Statement

Defence Shipbuilding

The Hon. M.L.J. HAMILTON-SMITH (Waite—Minister for Investment and Trade, Minister for Defence Industries, Minister for Veterans' Affairs) (14:10): I seek leave to make a ministerial statement.

Leave granted.

The Hon. M.L.J. HAMILTON-SMITH: On Friday 20 February, the commonwealth government provided initial details of its evaluation process for the acquisition of future submarines. It is the view of the South Australian government that these details, and subsequent comments from the Prime Minister, demonstrate a lack of serious rigour from the commonwealth in what is the nation's largest ever defence procurement.

It remains the South Australian government's position that whichever bidder is successful the federal government tender process must mandate maximum local industry participation. We would have welcomed a clear statement to that effect had the federal government made such a commitment last Friday. Instead—

Ms Chapman interjecting:

The SPEAKER: Leave has been granted. The deputy leader will cease interjecting. Minister.

The Hon. M.L.J. HAMILTON-SMITH: Instead, the best we were promised was '500 jobs in South Australia'. So, a $50 billion 30 to 40-year build, equip, sustain and maintain program will result in just 500 jobs. The chair of the South Australian Advanced Manufacturing Council, Professor Göran Roos, has delivered economic modelling that shows the flow-on effects of a local build with up to 1,600 suppliers nationally would need a workforce of between 15,000 and 25,000 workers—a far cry from the 500 offered last week.

Barely a few hours after the Prime Minister promised just a few hundred jobs, Great Britain's Prime Minister, David Cameron, announced that he would back Scottish shipbuilding with an £859 million investment in the next generation of the Royal Navy's Type 26 frigate. In his announcement, Prime Minister Cameron said that as well as keeping his country safe at home and abroad, the build was 'part of a long-term economic plan'. He said:

We're not just building the most advanced warships in the world—we are building the careers of many young people with apprenticeships that will set them up for life.

It would have been lovely to see such leadership last Friday. What are we doing in Australia by contrast? The federal government is telling the 10 year olds of today that when they graduate in 12 years' time they can expect little to be on offer in the shipbuilding industry. To the workers currently employed at the Forgacs shipyard in Newcastle, at the Williamstown shipyard in Victoria, at Henderson shipyard in Western Australia, and here at Osborne, the national government is saying that there is no genuine commitment to a sustainable naval shipbuilding industry.

The process announced by our national government appears to be skewed towards a strategic alliance with Japan that will boost jobs in Japanese shipyards. It is an alliance that also carries the risk of increasing tensions with China and all the strategic risks that go with that difficulty. To quote the words spoken yesterday by one of Prime Minister Abbott's own colleagues, the federal member for Grey, Rowan Ramsey, 'It's pretty murky.' We have also discovered that efforts by the commonwealth to favour an overseas build for the next fleet of Australian submarines fly in the face of the approach being considered by major corporations in the defence sector.

Saab, who have been building submarines for over 100 years, released a plan on Friday for a $20 billion build based in South Australia, on budget and on time. Within hours the commonwealth ruled it out on the basis that Saab has not completed a total design and build of a new submarine since 1996. Perhaps they should have done some due diligence on why the royal navies of Singapore and Sweden have been willing to engage with Saab as it upgraded the Södermanland and Archer class submarines, integrating new combat systems and new hull sections.

Saab's design of the Swedish A26 submarine started in 2010, and the new class of submarine will become operational in the 2020s. A comprehensive midlife upgrade program for the Gotland submarines has been underway for three years. Just what due diligence has the federal government done on the Saab option before ruling it out before it even stepped up to the starting line? What was the open competitive evaluation process?

In effect, this decision has ruled out an evolved Collins and the entire prospect of a design by a company that has put our six existing submarines in the water and continues to join us in maintaining them. It is indeed a very murky business, but it is a business that defines our future prospects. A recent study by the national institute of industry research, commissioned by the Economic Development Board of South Australia, shows a local build would create 120,000 man years of additional jobs—wages and jobs—in our economy over the life of the project compared to an overseas build. Our vision is a future for South Australia where young people can get jobs in this country—

Members interjecting:

The Hon. M.L.J. HAMILTON-SMITH: —and not have to go to Japan or somebody else's country to get a job using manufacturers funded by the Australian taxpayer. The employment opportunity, industry stability and a $21 billion bonus to the economy is what is on offer here. This is the biggest manufacturing decision this state and this nation have faced in a generation or will for a generation to come. South Australia deserves better.

The South Australian government will be fighting for what is right when it comes to advanced manufacturing demonstrated by this Future Submarines project. We will stand up for Australian industry and Australian workers and Australian families. We will stand up for ensuring Australia has the best defence capability, that we are self-reliant and that we have an industry and a workforce that can keep our Navy at sea in times of conflict.

We will hold the commonwealth accountable and make sure that they do not break their promise to South Australians that 12 submarines will be built in Australia and based in South Australia—

Members interjecting:

The Hon. M.L.J. HAMILTON-SMITH: —and we would hope that every member in this house would join us in that endeavour. We want a better future, not more murky business.

Members interjecting:

The SPEAKER: I would normally have warned members of the opposition, especially the members for Heysen and Hartley, for interjecting during that ministerial statement, but it was a combative and rhetorical ministerial statement so I have made some allowances. However, those allowances do not extend to the government and accordingly I call to order and warn for the first time the member for Taylor.