Defence Shipbuilding

The Hon. G.A. KANDELAARS (14:33): My question is to the Minister for Manufacturing and Innovation. Can the minister tell us how the South Australian government is supporting the future of shipbuilding here in South Australia?

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (14:34): I thank the honourable member for his question and his interest in this area. It is a poignant question today. As the honourable Leader of the Opposition has mentioned, the monthly employment figures are released today, and we know we are facing some significant challenges in South Australia.

The Hon. David Ridgway asked a question earlier about monthly hours worked, and I think I have found some information that I think answers some of the things that the Hon. David Ridgway was asking. In terms of hours worked, both on trend and seasonally adjusted figures, nationally that number is down and certainly over the year it is down in many places in Australia, the monthly hours worked in other jurisdictions, such as WA, Tasmania and the Northern Territory.

In terms of South Australia, one of the most important things we can do in the medium term for jobs in this state is have the federal government commit to naval shipbuilding in South Australia. We have seen reports that the ASC is cutting another 26 positions through forced redundancies. While small numbers won't feed in massively to an overall unemployment figure, we know that shipbuilding is going to be critical. We have seen the closing down—

Members interjecting:

The PRESIDENT: Order!

The Hon. K.J. MAHER: —and the slowing down of some of our very important industries in South Australia. We are already starting—

Members interjecting:

The PRESIDENT: The Leader of the Government is answering a question, a very important question, he should do so in silence. Minister.

The Hon. K.J. MAHER: We are already starting to see some of the results of some of the actions of the current federal government in terms of the employment scene in South Australia. We have talked in this chamber previously about the fact of the federal Liberal government, the then treasurer Joe Hockey in particular, chasing Holden out of this country. I think most people—

Members interjecting:

The PRESIDENT: If you want to waste question time by interjecting when a minister is giving an answer, do so.

The Hon. K.J. MAHER: The Hon. John Dawkins interjects, and the Hon. John Dawkins seems to chastise people who did everything they could to try to save Holden and save an industry here. He seems to think there is something odd with trying to save an industry that provides so many jobs in this state. He seems to think it is a bit strange that someone would try to save a whole industry. Well, I don't. I disagree with the Hon. John Dawkins.

I think it was the right thing to do to try to save this industry. I don't agree with his federal colleagues who told Holden to come clean and the very next day they closed down. I certainly am, and I think most people, both Liberal and Labor, but perhaps not the Hon. John Dawkins, are now starting to regret and rue that decision from the federal Liberal government.

We are currently one of only 13 countries in the world that have the capacity to build automobiles from the start to the end, from the design and engineering to it rolling off the production line at the end. There has been a fiction, I think, to try to support an ideology that we shouldn't provide funding and support to these sorts of industries.

Based on 2011 figures, in Australia direct budgetary support for the industry was estimated to cost (in US dollar terms) per capita $18 a year. The figure for the UK for support of their auto industry is $28, in Germany it is $90, in Canada it is $96, in France it is $147 and in the US it is $265, compared to $18 in Australia. It is an absolute fiction that we were providing too much support and assistance for our car industry.

What we need now though, the federal Liberal government having chased the automotive manufacturing industry out of this country, is for the federal Liberal government to honour their commitment and promises about naval shipbuilding in this state: offshore patrol vessels, future frigates and submarines built, as promised, right here in South Australia. Getting all that work is vital. It provides a continuous pipeline of work and many thousands of jobs.

The first piece of that jigsaw puzzle is the offshore patrol vessels. Getting that work will help avoid what has become known as the shipbuilding valley of death. The concept of the shipbuilding valley of death is very real. Workers are already losing their jobs and there are likely to be more to come. I am told that the ASC's current shipbuilding workforce is approximately 1,400. By 2019 it is forecast it would reduce to around 100 if no new work is provided at the shipyard.

We do not need to and we do not want to go through this valley of death, lose our shipbuilding capacity and start the frigates and subs from a cold start. If that happens, there might be an incentive to go elsewhere, such as to Western Australia, to build these things. It is conceivable that rather than risk a cold start in SA after having let our workforce run down, a future federal Liberal government may opt for either a partial or a full build of frigates in WA or submarines in WA. The commonwealth government commissioned the RAND report in 2015 and that report from April 2015 states:

The OPV (offshore patrol vessel) program will only have a positive effect in mitigating the valley of death if the OPVs and future frigates are built in the same ship yard.

This is a report commissioned for and received by the federal Liberal government in April 2015. The RAND report goes on:

Building the OPVs elsewhere will create additional risk and an added cost of up to 40 per cent of the future frigate program.

It goes on:

At least 20 per cent of the current air warfare destroyer shipbuilding workforce should be retained to reduce the effects of the boom-bust cycle.

It goes on:

Australian shipbuilding should be consolidated in one shipyard with potentially a second yard for major block construction.

Building the offshore patrol vessels in South Australia is in the national interest. It will significantly de-risk the $30 billion future frigate program which is due to commence in Adelaide in 2020 by, firstly, retaining shipbuilding skills and knowledge and, secondly, by ensuring infrastructure remains productive and the use of significant investment is capitalised.

What is very puzzling is that the Abbott-Turnbull government seems to recognise the importance of shipbuilding for the future of South Australia but is not committed to doing anything about it. Members would recall an opinion piece from Senator Simon Birmingham that stated:

Around $40 billion of investment on future frigates, OPVs and other surface ships will provide a steady stream of work for shipbuilders in Adelaide which will support many more jobs in associated suppliers and have multiple economic benefits throughout our economy.

I completely agree with Senator Birmingham. He is exactly right. On this, I am prepared to back him in. As I have said, the RAND report says that we need to de-risk the future frigates and submarines project by building the OPVs here in South Australia. More importantly, the Premier and my good friend the Minister for Defence, the Hon. Martin Hamilton-Smith, have been leading the fight for our fair share of shipbuilding here in South Australia.

The Hon. D.W. Ridgway interjecting:

The PRESIDENT: Minister, just sit down for a second. I do not think it is appropriate to refer to a minister of the government as a rotten egg in this house, so I think you really should withdraw the comment.

The Hon. D.W. RIDGWAY: I withdraw the fact that he is rotten.

The Hon. J.S.L. DAWKINS: I remind the President that the minister has been on his feet for over eight minutes answering this question.

The PRESIDENT: Minister, get on with your answer and try to get right to the point.

The Hon. K.J. MAHER: Thank you, Mr President. I will move as quickly as I can through this but if I am delayed by constant interjections from the Hon. John Dawkins, who has been here a very long time and ought to know better, it will take longer obviously.

Martin Hamilton-Smith, Minister for Defence, and the Premier have been lobbying very hard from the Prime Minister and federal ministers down. We have forced the Abbott-Turnbull government to make sure that a decision on the design and build on submarines is fair and transparent. We all remember when the prime minister at the time, Tony Abbott, was facing a leadership challenge. The brave Senator Edwards forced him to make up a brand-new process to consider building here.

They held them to account and now we have a commitment, as it stands, although we had a commitment before, to build future frigates here. The South Australian government, particularly through the Premier and the good egg, minister Hamilton-Smith, will fight for this work here in South Australia.

The reason this is so crucial is that we are potentially only three or four weeks away from a formal federal election campaign when the federal government will enter into caretaker mode. It will possibly be only three or four weeks away if we have a 2 June double dissolution election. We could be only weeks away from entering caretaker mode. We need a commitment and a commitment that South Australian people will believe, not like the last one, to build ships here. Even if the federal Liberal government, supported by this mob over here, even if they do not have the moral decency to understand, they have—

The Hon. T.J. Stephens: Why don't you sit down. You're embarrassing.

The PRESIDENT: The only thing embarrassing at the moment, the Hon. Mr Stephens, is your behaviour, with guests up here in the gallery.