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House of Assembly - Fifty-Fifth Parliament, First Session (55-1)
2023-07-03 Daily Xml
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Defence SA, $19,179,000


Membership:

Mrs Hurn substituted for Hon. J.A.W. Gardner.


Minister:

Hon. S.E. Close, Deputy Premier, Minister for Industry, Innovation and Science, Minister for Defence and Space Industries, Minister for Climate, Environment and Water.


Departmental Advisers:

Mr R. Price, Chief Executive, Defence SA.

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


The CHAIR: We now move to the portfolios of Defence SA and Space Industries. The minister appearing is the Minister for Defence and Space Industries. I declare the proposed payments open for examination and call on the minister to make an opening statement, if she would like, and to introduce her new advisers.

The Hon. S.E. CLOSE: On my right, I have Richard Price, who is the Chief Executive of Defence SA, and, on my left, Peter Murdock, who is the Director, Finance and Systems, Defence SA. Although I have an opening statement prepared, I will not give it; I will allow questions and will probably draw on the opening statement in my answers.

The CHAIR: Member for Morphett, the floor is yours.

Mr PATTERSON: Thank you very much. I refer to Budget Paper 4, Volume 1, page 160, targets, dot point 1. Can the minister provide an update on the current progress relating to the upgrade of the shipyards at Osborne to facilitate the building of the AUKUS submarines?

The Hon. S.E. CLOSE: I do want to give an update. I think we are all aware that there is $2 billion that has been set aside by the commonwealth government to spend in the next four years to build the shipyards ready for the AUKUS effort, the submarines. There was put into the paper an image of what that looked like, although I think that came as a surprise to some people involved in the process that that was made public.

The significant proportion of that money will actually be spent moving power, both electricity and gas, which currently run through and over the site and clearly cannot interact with the building of nuclear submarines. Although not in that $2 billion, there is also to be built slightly later, or at least funded separately, the training and skills academy that will be built at the Lefevre Peninsula up at Osborne.

When I say I would like to give an update, my only hesitation is that sometimes the briefings that I am in are confidential. I think probably it is best we acknowledge that that money has been set aside—so what is in the public realm, that is the timing—and also that there is an expectation that there will be physical works starting in the fourth quarter of this year and that some of the work will need to wait for the identification of the shipbuilder. Some of it is able to start earlier and some of it will need to wait until we are clear who is doing the shipbuilding so that the design can be done in concert with them.

Mr PATTERSON: Which makes eminent sense. Of course, respectful of sensitivities for national security purposes, I am just trying to get an idea of the start of it, how the process will work out. It seems to be to do with power and gas. In terms of actually getting the facilities to the stage where they will allow for componentry to be built for submarines, do you have an indicative time line around that?

The Hon. S.E. CLOSE: Are we still talking about the site at Osborne?

Mr PATTERSON: Yes.

The Hon. S.E. CLOSE: As I said, the work will start in the fourth quarter of this year—physical, on-ground works—and I understand there is significant planning that is occurring right now for those first stages, which will include car parks and some buildings. I ought to also point out, although it is already on the public record, that there is an expectation of something like 4,000 construction staff over those four years that will be required, so even just to make sure we can get the workforce together for that will be a reasonable effort.

Mr PATTERSON: Bearing in mind that figure of 4,000, it seems that would anticipate between now and the next four years that there will be an understanding of who the shipbuilder is going to be, potentially—

The Hon. S.E. CLOSE: Yes.

Mr PATTERSON: —because I would not imagine it would be 4,000 staff for the power relocation.

The Hon. S.E. CLOSE: No, not at all. It is for the proper construction; that is right. I do not know if the identification of the shipbuilder is publicly discussed, but we will not be taking too much longer. It is an important part of the process because so much hangs for Canberra on being able to work with that company for defence and also for us in helping to get the skilling ready and so on and designing the courses. We are all waiting for that to happen, and I am sure it will not take a significant proportion of the four years before we know. I am sure it will be relatively early, but it is not quite yet.

Mr PATTERSON: In terms of the SSN-AUKUS, which is based on the UK shipbuilder, we cannot, obviously, lock in, in particular, who that will be. We will leave that up to competitive tensions so we get the best bid possible, but, in terms of the SSN-AUKUS, how far are we progressed for designs, or is it not even at the stage where that can be commenced because the first part of the process is to decide who will build it before we know the designs?

The Hon. S.E. CLOSE: I think that is right, but I would also say that, although we have an enormous interest both as the government and as the parliament and the people of South Australia in what these decisions are, they are not actually our decisions to make, so I am wary to speak too much. In some cases, I do not know the precise timing because that is something that is being held by Canberra and by the AUKUS relationship.

Perhaps if we put it this way: there is a series of steps that need to be taken. Step one is the exchange of land that sits behind the development that is required for Osborne North and that is proceeding apace. There is also the design of what will go on that site, some of which is easy to do now and some of which will await the identification of the builder for the ship. Then there is the identification of that builder and the work with them not only in what happens at Osborne but also what skills and training are required.

At the same time, of course, there is the expectation that as a nation we will be buying the first few submarines from the US and accommodating that process. That is not directly our issue but is one that we are aware is part of the steps that Canberra needs to manage as they get ready for us to have our own sovereign capability in submarine building.

Mr PATTERSON: You have said that we are purchasing Virginia class to start with, but the Osborne facilities do not have to cater for even—

The Hon. S.E. CLOSE: I am just laying it out. There is all this complexity for Canberra in stepping out the process that we are going through.

Mr PATTERSON: On the same budget line, we are talking about the design. Yes, we do not know the submarine shipbuilder at this stage, but at some stage that will be decided on. Design work will have to be undertaken. Presumably, the shipbuilder based out of the UK will have experience and existing supply chains in place, with predominantly UK companies involved. At this stage, what measures are you taking as minister to investigate how South Australian defence companies can participate during the design phase? What I am alluding to is the design getting done and after the fact they say, 'But this South Australian company could have been involved had we known.'

The Hon. S.E. CLOSE: I will turn to some of the detail about that. A conceptual way of thinking about what AUKUS means is that it is not that we have our shipyard and we are going to buy a version of a submarine, such as with Naval Group, get in a company and get them to come and build it here. What AUKUS means is that we are really part of an interconnected global shipyard across the three nations.

That means not only the building of the submarines but also the supply chain involved in preparing the componentry. To some extent, the staff working on building those submarines will be much more interconnected than when we were just talking about employing a French company to come to Australia and build some submarines for and with us.

What I mean by that is that there will be some opportunities that are likely to come up even for Virginia, where some companies in South Australia or Australia may well be able to bid into that supply chain. This is partly because the work effort in the US is maxed out—they are going full bore getting the submarines ready that they are building—and partly because they recognise, as do the UK and Australia, that AUKUS only works if all three are strong and contributing. The more they can build a supply chain here, the more likely we will be able to take our share of the load later. That is contextual—we are operating in a slightly different environment now.

What is occurring at the moment is that there is some legislation and policy work looking across about 600 pieces of state legislation and consulting with relevant stakeholders. There is industry development, a system taxonomy model being developed. This will outline, at the highest level, 60 main systems required in a generic nuclear-powered submarine—ones that we know are going to be part of any kind of nuclear-powered submarines—so that we can understand where industry can fit into those. There is also stakeholder engagement and consultation.

At the moment, over 40 stakeholders for engagement have been identified and meetings have been conducted across a two-month period. These have been identified from government, education, industry and environmental associations. It is about building up the network of those who have an interest in how this will unfold, including those who will have an anxiety about how it will unfold, particularly when we talk about the environment side—and perhaps the community side, as the representative of the good people of Port Adelaide. We are trying to build that up as part of the preparation for then the full participation in building these submarines: industry, employment and so on.

Mr PATTERSON: Excellent, thank you. I refer you to Budget Paper 4, Volume 1, page 160, targets, dot point 1. In regard to that pathway we have talked about for the up-front purchasing of US Virginia class submarines, are you also investigating what the scenarios of risk might be that could see Australia purchasing five Virginias rather than three?

The Hon. S.E. CLOSE: It is an interesting situation being the state government in this circumstance, isn't it, because we do not have control over decisions. Even Canberra might say, 'We don't know who's going to be in government by the time those decisions are being made.' Certainly for South Australia, we are several steps removed from that decision-making. What we need to do is make sure that we are, in every way, ready to serve and to benefit from the work that will happen here. Part of that is preparing ourselves to participate in the building of the Virginia, as I mentioned.

At the moment, Congress is only seeking approval for two Virginia classes, for example. The still further level of complexity is how many they will sell to Australia. It is absolutely right for you to point out that we need to be prepared for a variety of possible outcomes so that we are ready to benefit from whichever one is taken, but it is also at a certain point that we just need to keep getting people trained, getting components and companies prepared, getting our own house in order, and watching as these decisions evolve.

Mr PATTERSON: Sure, that makes sense. I think you have answered it, but just to close it off, if it was the case that more rather than less were purchased—you talked about the US Congress maybe even cutting it back to two—if that does push it out, because I think we had a program of the new ones being built every three years, potentially, so there is quite a big range in times. How could that potentially affect South Australian companies? Would it create a valley of death or—

The Hon. S.E. CLOSE: We can both see the challenges that are before us as a state, and we have been here before. One concern I have had has been whether there is a degree of cynicism amongst both the community and industry, having seen the French project cancelled summarily, which is not to say that I do not support AUKUS but I do feel the pain of those companies that have really geared up to work closely with Naval Group, and whether that alters their view about their preparedness to participate fully in this process.

If I step away from specifically the question about submarines—how many, when—what we have a commitment to from the commonwealth government and what we must, regardless of what happens politically on either side, maintain a commitment to is continuous shipbuilding at Osborne because that is how you are ready for all eventualities.

Our participation in the recent review currently being undertaken for surface ships is equally important because if we can make sure that we are putting our best foot forward to seeing that continuous build with a timing that allows the workforce to move from one to the other then we will have that flexibility and preparedness for where the submarines fit into that schedule.

Mr PATTERSON: I refer to the same budget paper and volume, page 160, highlights, dot point 3. You talked a bit about investigating a whole raft of legislation—I think 600 pieces of legislation, I take it from the commentary in the budget papers. Was that related to the work done by the SA nuclear submarine task force, which has now been completed? And depending on the answer, when the report was finalised, was it finalised prior to the March announcement of AUKUS, and would that affect any of its findings?

The Hon. S.E. CLOSE: Yes, it was completed earlier, but, no, it was not affected by that, I am advised.

Mr PATTERSON: Is it likely there will be the ability for parliament to receive that report, and the opposition?

The Hon. S.E. CLOSE: There is a challenge with commercial-in-confidence material that is in that report.

Mr PATTERSON: I can totally understand that. If we get to maybe where it moves onto, that has been closed up, so if we go to the same page, targets, dot point 1, talking about that being closed up, has that now been replaced by the Office for AUKUS? Is that the intention going forward?

The Hon. S.E. CLOSE: Not necessarily. We are still working out what the Office for AUKUS looks like and the extent to which the work that Defence SA has been doing continues. Bear in mind there is also some work that DIIS has been doing in relation to the workforce planning as well, so there are multiple agencies that are already involved in trying to make this successful, as you would expect with such a major industry and with the opportunity for such economic transformation off the back of it.

The intention is that the AUKUS office will be established inside the Department of the Premier and Cabinet and also that it will have a coordination function of legislation, workforce, infrastructure, environment and social licence. There is work that occurs in Defence SA on this project that sits well beyond that remit, but until we have a leader identified and they start to stand up exactly what it looks like and what makes sense to be held centrally with Premier and Cabinet, there will be some refinement. I imagine in estimates next year we will have a longer conversation about it.

Mr PATTERSON: I look forward to that. So we will have the Office for AUKUS and we will have Defence SA. I suppose I am trying to establish maybe the role that Defence SA and you as the minister will have—what your role is. I am hoping it will be a lead role and it will not be sidelined or overwhelmed by the Office for AUKUS and you just become a—

The Hon. S.E. CLOSE: No. Partly it is not going to be big enough to overwhelm the weight of work that is done by Defence SA, and in this case there is plenty of work to be done for all. What the Premier I think has identified is a need to have a single point of contact that is able to reach into the work that is being done elsewhere, some of which is being done in Education, because of the vocational training effort that is there and also the technical colleges and schools, some of which is happening in Trade and Investment, some of which is happening in DIIS and some of which is happening in Defence SA.

There needed to be one AUKUS front door that would be able to coordinate that. I think that that makes a lot of sense but, like I say, the detail of what then sits exclusively there versus reaching in for coordination will evolve over the next few months. Any sense of sidelining of my own role, I have no concerns about whatsoever. The Premier is very rightfully the person who speaks for the state on many issues that are of the state weight, and if any have that level it is AUKUS and defence generally.

I am always delighted when the Premier wants to step in and take a leadership role in that. It can only add to what happens for our state when he does that. You will notice sometimes in question time that you might direct a question to me or you might direct it to the Premier and we have a little conversation about who will answer. My view is usually that it is better that there be one voice on something as weighty and as sensitive as AUKUS and, therefore, I tend to prefer him to be that one voice because he has opportunities to be in places that we all want him to be, and to be successful, including national cabinet.

Mr PATTERSON: On the same page in the budget papers in the highlights, dot point 4, around the Defence Strategic Review, one aspect of the recommendations that is causing some concern is the statement that is made, and because of time I will get to it exactly. It states: 'Defence must, where possible, acquire more platforms and capabilities via sole source or off-the-shelf procurement.' Regarding off-the-shelf procurement, maybe if we talk about AUKUS to start with. Do you see this having an impact on South Australian companies that are trying to establish themselves into those supply chains when presumably there is quite a lot of off-the-shelf, decades worth of supply chain in both the US or the UK?

The Hon. S.E. CLOSE: I have been Minister for Defence for a bit over a year and I did not hold the portfolio in shadow during opposition, so I have been on an interesting learning journey about how defence works and I would not pretend that I am a master at it at all. But it seems to me that there is a constant tension when we are talking about defence procurement between three good things: capability now, so that the country is defended; building industry capability for economic transformation and for sovereign capability; and skills and workforce development, which requires a long lead time, not just in training people but in giving them experience because it is often experienced workers who are required, not just someone who has just finished their apprenticeship.

Those three are not necessarily in harmony, so we ask defence procurement to do a lot. We want them to make sure that they are keeping us safe but we are also asking them to make sure that they are building long-term capability inside supply chains. Those do not sit neatly together, as you are pointing out. I guess all I am illustrating is that this is not new; this is the world of defence. Let's cast back to the Tony Abbott buying submarines from Japan period in our adventure. That was very much capability, 'I just want to buy something, I am going to do a deal with Abe and then we will have it.' Then you go to, 'What we will do now is we will have this French deal and they will transfer sovereign capability to us,' and then that gets eclipsed, obviously, by what is happening with AUKUS.

What we must do at every point in all the decision-making is concentrate on preparing our industry to be capable and useful so that people turn to us. One of the advantages we have at present is the amount of work happening around the world means that we are going to be dependent on supporting each other. So that is my little view on the way that defence works and the challenges that sit within it, regardless of who is in government.

Mr PATTERSON: Thank you. It is difficult. Again on the same page in the budget papers but dot point 2, we talked about the need for continual shipbuilding and the Hunter frigates. Have you said that you have submitted a state government submission for the surface fleet review?

The Hon. S.E. CLOSE: That has gone. I think the Premier said just the other day that he had submitted it.

Mr PATTERSON: I did not want to assume I had misheard. In terms of that, the real thrust of it is around the fact that there are nine Hunter class ships that are proposed to be built. We do not know. We hope it has not been reviewed—that is, looking at other surface ships. Did you recommend to, and advocate, that the full nine Hunter class ships continue to be built here at Osborne?

The Hon. S.E. CLOSE: Without wanting to go in detail through a confidential document that has gone to a defence review, the import of what is in South Australia's interest is continuous shipbuilding. It is open for Defence very legitimately to say, 'Is the design of this ship, which was designed in the context of that kind of submarine, still the appropriate design given we are having this kind of submarine?' Regarding the amount of weaponry that can be carried, the distance travelled, the noise made—all of that—it is a legitimate question. At the same time, it is extremely disturbing for any industrial state, such as we are and have ambitions to be, to have to continuously wonder how much longer we are going to build this kind, and are we going to be able to build the next kind.

Our argument was essentially that we recommend continuous shipbuilding, not just because it is in our interests but because it is in the sovereign capability interests of the nation, and buying things off the shelf, although it gives you what you want immediately, argues against that sovereign capability transfer. What we want is an approach that plans ahead in order to prepare us for being able to do the submarines in due course. That is sort of the import of what any decent state government submission would have said.

Mr PATTERSON: I understand it is confidential, but along the way have you received advice, say, from the federal defence minister that while they are looking at the surface fleet review, given the preeminent issue is workforce continuity, there will not be any expected job cuts or potentially some of the shipbuilding moved to other shipyards?

The Hon. S.E. CLOSE: With the three that are being built, that are being planned and starting to be built already, we need an increase in staff in Osborne. BAE are going to employ more people, so there is not an immediate problem with employment. There is not an immediate risk of losing jobs. What there is more of is the need for people to have confidence to invest in that as their career, and to become really good at it, so that they have the experience to lead more complex work still.

Having been again at BAE just last week, they would argue that the Hunter class frigate is one of the most complex machines made. We talk a lot about submarines being that complex, but they would argue that they are really the submarine that happens to sit on the surface, so there is already a real degree of complexity and sophistication therefore in work.

Things can change overnight, and in politics one should never make definitive statements, but the emphasis for me is not concern about immediate job loss because it is immediate job growth. The emphasis for me is increasing our capability so that we are ready for the long term and so that this actually shapes our economy rather than becomes a thing we do and then we stop and then we do, and then we never do it particularly well, so that continuous ship build is so important for us to become exceptional at this work.

Mr PATTERSON: Have you had any indications of when that review will be complete?

The Hon. S.E. CLOSE: I do not, and I would really hesitate to speak for the commonwealth.

Mr PATTERSON: Fair enough, I understand. On the same page, even the same dot point, we talked also about continuous shipbuilding from the full cycle docking of the Collins as well. Have you had any guarantees from your federal defence minister or your counterparts that the full life-of-type extension work on all six of the Collins class submarines will continue?

The Hon. S.E. CLOSE: Sorry, what will continue?

Mr PATTERSON: The life-of-type extension on all six of the Collins class submarines.

The Hon. S.E. CLOSE: My understanding is that is the plan, that at this point nothing has changed, and that is very much the language that was used when the AUKUS announcement was made. We spent time with Richard Marles, Penny Wong and Pat Conroy up at Osborne. It was very much that that is the intention to do that.

Mr PATTERSON: That is reassuring because the federal defence minister did say that keeping them going and operational was not a great answer, so I am glad to hear that. We will move on to Budget Paper 5, the Budget Measures Statement, page 23, growing the space industry. In regard to the Australian Space Park and its repurposing, what advice has the minister had from the commonwealth government that they will maintain their $20 million of funding towards the Australian Space Park?

The Hon. S.E. CLOSE: I am not sure if we had this conversation or it has been more in the context of media discussions but, to run through my understanding of this history, under the previous regime the commonwealth had a modern manufacturing initiative round of grants, and Fleet and three other companies put in for money for that to create some facilities at the Airport and were initially successful in that bid. Two of those companies subsequently withdrew from that effort, and I believe that Fleet has put in an alternative proposal that modifies slightly what they were looking for.

We are not party to that. Our commitment to a Common User Facility for building satellites and for facilitating companies being able to do things because there is access to kit they cannot themselves buy because they are still small and emerging companies—our commitment for that $20 million predated that. We are not a funding partner. The $20 million from the commonwealth was not granted in the context of the state government's contributions. I do not want to speak for two other parties to their own agreement, and I believe that they ought to be able to make any statements they want to about what will happen.

I fully expect the companies still involved to still go to Adelaide Airport, but it is for them to say. Fleet, in particular, are a very successful company, but they are also at a delicate point in capital raising, so any speeches from politicians one way or the other are probably not welcome; they want to speak for themselves. What we have is $20 million that was identified and at that point was identified to facilitate the building of larger satellites. We understand now—particularly but not as a result of the decision made by the federal government not to pursue their own satellites, going through that process, but our views had predated that—that in fact it is smaller satellites that are being built at present. That is what there is a market for.

Our view is that there is a better way to use that $20 million to help more emerging companies and that we need to consider what kind of facility best does that and whether it is attached to research, where it is located exactly, which companies are able to participate and how. We are now doing that work. The money has stayed. It has gone from Investment and Trade into Defence SA, which I think is the right home for it, and it sits alongside a reasonably significant contribution in operational funding for the space part of Defence SA.

We will do that in concert with the companies involved in space in South Australia and make sure that we get maximum value, and we will do that reasonably quickly. I am aware that there has been some time elapsed.

Mr PATTERSON: There is a fair bit to unpack there, so I hope I get it in a sequential manner. Firstly, I suppose you are able to inform us who the two companies that withdrew were?

The Hon. S.E. CLOSE: The two companies that withdrew sometime last year are Q-CTRL and ATSpace. The two companies that remain involved are Fleet and Alauda—for some reason I cannot hold that name in my head.

Mr PATTERSON: Part of the MMI bid, yes, you are right, had Fleet as the lead proponent. Each of them needed to have a private entity as the lead. Fleet are still there. My understanding of what was envisaged of the Space Park was, yes, the state government was putting in $20 million for the common user infrastructure and equipment, but then that the attraction for the commonwealth was that they could come in and that their $20 million would sit alongside this and effectively have a Common User Facility plus-plus, so $20 million of their funding, $20 million of state and you also have private investment into that.

It seems like, while we do not know the exact decision of the federal government, should they even wish to continue, that would be between them and Fleet and where Fleet wants to locate. Does that confirm that the Common User Facility that will built in Lot Fourteen will necessarily be significantly smaller than first envisaged?

The Hon. S.E. CLOSE: It is definitely for smaller satellites. What we want to do is make sure that the $20 million we put in—and at no point would it have been suggested that it was only for two companies to use—maximises the reach for companies and that it is of a nature that is most useful for them. Having recognised the shift in market from large satellites to small, and in size we are talking about the original plan at the Airport being 300-kilo satellites and we are now looking at around 100-kilo satellites for Lot Fourteen, that is the basis on which we are doing our consultation.

I like the idea of the Lot Fourteen location. I like Lot Fourteen a lot. Having spent time there and seeing the energy of the companies there, I think it is the right place. It is possible in the consultation that we will identify a different location, but I think there will be a lot of support for that from space companies interested in having access to a Common User Facility of that nature.

Mr PATTERSON: When I said 'small', I did not mean just in terms of footprint; I actually meant in terms of the amount of equipment provided in the Common User Facility. I think it was always intended that it was not just for the co-located tenants; it was also for the broader space industry. We are now building smaller satellites, but I would have thought we still needed to have testing equipment, circuit boards, that type of equipment.

Obviously you will need to consult with stakeholders to really get to the bottom of what that equipment might be. Before I ask that question, in terms of the federal government, surely you would have said to them, 'Well, we're out. We're moving over here.' What discussions have you had with the federal government around that? That could impact on whether they decide to go ahead with Fleet.

The Hon. S.E. CLOSE: Technically, it does not because we were not a requisite funding partner. I speak to Ed Husic reasonably frequently and, despite my very serious disappointment in his decisions recently about space, he is a decent human being and always good to talk to. I have told him that this is our intention, to move the effort for the Common User Facility, as part of explaining to him the importance to us of maintaining state support for the space industry.

That is important in two ways. I am disappointed, of course. Money being spent in industry is always good, but when it is not your money it is brilliant, so any money that disappears from the commonwealth is not a good thing. I think, in a way even more important than what that money was being spent on—and the commonwealth has a right to choose what it wants to spend its money on—is the perception from the emerging space industry of, 'Is this something that is wanted here, that is valued?'

It is very important to me that, while we express righteous and rightful disappointment in the commonwealth decisions, we do not allow that to translate into catastrophising what is happening with space. The state investment has increased a bit; it remains undiminished, and we see the future for space, and that is partly what is happening right now in the industry with people being able to do good research and commercialise that and be employed in that.

There is also this other really significant piece for me, which is the enthusiasm that young people have for space translating into sticking at STEM longer. I have put this to the federal minister as well. I think he sees that argument, but nonetheless he is choosing not to buy some satellites because he thinks he can get the data elsewhere. That is a very transactional decision, whereas I am trying to deal with the vibe of the importance of space. So that is part of what we are trying to do with Lot Fourteen, with this $20 million, is really connect properly with what industry wants right now and be responsive to them.

Mr PATTERSON: Will all of the $20 million allocated be spent on common user equipment? Will it be spent on refurbishment of any buildings or rents?

The Hon. S.E. CLOSE: We have not even identified quite where it would be, so what would be necessary to make that Common User Facility work, but it is essentially about equipment, yes.

Mr PATTERSON: On the same budget line, is any of that $13 million in operating expenses for growing the space industry to be spent on the industry or on rent for this Space Park?

The Hon. S.E. CLOSE: It is on the space talent pipeline, so it is on developing the workforce, it is on the Andy Thomas Space Foundation which does extraordinary work, it is on the Southern Hemisphere Space Studies Program that you would be familiar with, and it is also about the space incubator, so nurturing new companies. That is where having the big capital spend that we are able to put in will, I think, significantly bolster that effort, but by no means is the $13 million directed only at that.

Mr PATTERSON: Will the minister be consulting with defence primes in relation to what facilities may be required in the Common User Facility?

The Hon. S.E. CLOSE: Yes, in order to understand the landscape that the smaller emerging companies are operating in.

Mr PATTERSON: On the same budget line, where we are getting to is that we are still going to invest the money in common user equipment and facilities but potentially not as much in terms of quantum of money. Do you have any idea about the utility or economic impact of the cuts that are going to occur to the amount of equipment available for the Australian Space Park?

The Hon. S.E. CLOSE: My adviser is just pointing out that state money is not being reduced; we are still spending $20 million, so there will still be that benefit.

Mr PATTERSON: But we do not have the federal co-contribution, which I would imagine would significantly reduce the amount.

The Hon. S.E. CLOSE: It was not a co-contribution, it was a partnership with Fleet and, as I say, we will let Fleet talk about that future.

Mr PATTERSON: Fair enough. We will keep moving on then. Still on the same budget line, can you give an understanding of when construction might start for this repurposed Australian Space Park and when companies will be able to start operating from it?

The Hon. S.E. CLOSE: We will spend the rest of this year doing that consultation, because what we do not want is to have to change again. We need to do it properly and make sure that it is hitting the right spots, so we will take this year to do that and will then be rolling it out next year. The chief executive has pointed out that the money is programmed for next year and the year after as capital expenditure.

Mr PATTERSON: On the same budget line, in terms of the other announcements going on in Australia—which of course you have to be mindful of—it has recently been announced that the commonwealth government is to provide $52 million to Gilmour Space Technologies and their Australian space manufacturing network initiative in Queensland, which was part of a separate MMI collaboration stream. Have you identified what the impact of having another space manufacturing facility could potentially be on the South Australian space industry?

The Hon. S.E. CLOSE: Obviously, that decision was made under the previous federal government because it is an MMI grant. We understand that Gilmour are about rockets as well as satellites, but they have not actually done anything yet. We are not really sure what they are going to be producing, but we will be keeping a close eye on it. I think it argues still more, though, for having a small-scale satellite Common User Facility in South Australia.

Mr PATTERSON: Same budget line: in light of that, and there is obviously a lot of growth in the space industry in Australia, what actions is the minister taking to ensure that South Australia maintains the first mover advantage, and how can South Australia keep attracting investment in manufacturing to this repurposed Australian Space Park?

The Hon. S.E. CLOSE: Spending money on developing people is one way in which we will do that. As I mentioned earlier, a lot of the $13 million is directed towards the space talent pipeline—being able to build enthusiasm, knowledge, skills and experience in people in South Australia working in this field. That is how I think we maintain our advantage.

I am aware, watching carefully, that the international space congress is going to New South Wales next year. I was there last year in Paris. Of course, we had it in 2017, which really kicked off South Australia being, as I somewhat cutely say, the centre of gravity for space in Australia. I am watching with care and interest about what the New South Wales government tries to do to leverage from the international space congress.

That is why, although it can sound not a particularly great achievement to keep something that you already have—though let's not forget the dramas of keeping the full cycle docking for the Collins class, which took years to settle—I am very reassured, having been told many times by Ed Husic that we will be keeping the Space Agency, because any thought that another state would try to take that would be a very great concern to me. I acknowledge that keeping something you already have does not sound like a great achievement, but it is extremely important that we keep it.

Mr PATTERSON: Before we get to those areas, I am still on the same budget line. Last estimates we spoke about having the Australian Space Park at Adelaide Airport potentially as a location. It was not finalised by all means, but presumably there were negotiations going on. How far along with those negotiations did the government get with Adelaide Airport?

The Hon. S.E. CLOSE: Obviously, there has been a shift in which agency is taking responsibility for that as well. It is now over with us, and there are still negotiations and discussions going on. We sit with Fleet SA and Alauda. We want them to succeed, so we are part of the discussions with Adelaide Airport about that process and we will not stop being very supportive and involved.

Mr PATTERSON: I turn to Budget Paper 4, Volume 1, page 163, objectives, dot point 1, around supporting the space industry. You touched on the fact of how important it is to maintain momentum. The space industry has really started to get some momentum over the years and at the same time, as you have said, there have been cuts to the federal budget. While you are not responsible for that, and I understand that, in terms of the impacts on South Australian companies that were affected by those decisions what feedback have you had, as the minister, from South Australian space companies and space industry stakeholders in relation to the federal government's decision to cut the Moon to Mars supply chain facilitation program?

The Hon. S.E. CLOSE: The two big cuts are to building our own Australian satellites and the Moon to Mars mission. The feedback I have had—and I will turn to the chief executive because he may have some additional information—has largely been about the atmospherics rather than the particular supply chain. Inovor, because they are building Kanyini, our satellite (which you would be very familiar with), I think has a particular concern about what it means for their work and their future work. Otherwise, the feedback that has come to me has been largely: 'We don't want anyone to think that Australia is not interested in space anymore.'

The discussion has been along the lines of ways in which we can ensure that the South Australian enthusiasm for space—not just financial commitment but enthusiasm for it—is maintained and is undiminished and that has been very important. I will turn to the chief executive for any additional information.

Mr PRICE: It is mixed. I think everybody in the industry is disappointed by the general thrust of the direction. Some companies were not really counting on the federal money for their plans and they continue to pursue those vigorously. Other companies could see opportunities and are very disappointed. Perhaps the greatest group is the international companies who were looking at their strategic plans for Australia. They are now revisiting the strategic plans.

Mr PATTERSON: I will take that as a broad commentary, but I am interested in the specifics of each program as well. Another one of the programs that has been cut was around the $30 million program designed to support faster access to space flight by Australian companies who are looking to put their satellites in space. What is the general feedback around that?

Mr PRICE: I have not had any specific conversation with launch companies other than that I think the launch companies that have well-developed plans perhaps did not need the funding to the same extent. Perhaps it has a bigger impact on those that have not developed any plans at this stage, but I have not had any specific conversations about the withdrawal of that funding.

Mr PATTERSON: In a similar vein, another one of the programs cut was in relation to the $32.5 million support for the development of Australian spaceports. We have Southern Launch looking to try to establish their facilities here. Maybe it is a twofold question in terms of what the feedback has been in general regarding the program cut, but then also an update on Southern Launch and them trying to get launches off the ground.

Mr PRICE: I may have answered the previous question with a view of launch facilities. Southern Launch's application is still with the planning minister and that is still under his consideration at the moment.

Mr PATTERSON: On a larger scale, just last week we had the federal government announce the cancellation of the $1.2 billion National Space Mission for Earth Observation, and you talked about the government's intention being to put satellites in orbit but now potentially looking to purchase that data from other countries. What has the feedback been to you, minister, from South Australian space companies and industry stakeholders in relation to this substantial program?

The Hon. S.E. CLOSE: Of course, it is to continue to purchase data because the government does not own any satellites at present. I am really pleased we are building our own, by the way. I think that is a really good counter for that decision, that we are still investing in having our own. I am disappointed in the decision because I think as a nation we are going to need our own satellites sooner or later, so to me it is likely to be a deferral of the purchase.

My understanding is that it had not gone to tender, so there are no companies that thought they were doing it and now are not. There are no job losses in that sense. One of the reasons may have been that it was in that very early phase and another reason may very well have been that we are getting the data anyway, but I think anyone who is looking at the way that we are increasingly dependent on the information that we get from space and near Earth observation knows that we will increasingly want to have autonomy, sovereign capability, in that.

Again, the feedback that has reached me has been less about that being a problematic decision for employment in the next five years, other than Inovor, which has raised the concern, and more about wanting to know that the Australian government understands the power of information that comes from space and the utility in having control over that. I would have loved the decision to have been different, but I also have a sense of the longer view that it is going to come back around. It is disappointing that it is not now, and we just have to maintain our dedication and enthusiasm.

Mr PATTERSON: I agree that it needs to come back; it is something that is important to us as a country, for sovereign capabilities. Talking of sovereign capability—and it is aligned to defence as well—some of the big prospects for space companies getting involved are in big defence projects. What actions are you as a minister taking to ensure, in light of these federal cuts, that South Australian companies can still establish themselves in space supply chains so that they will have the ability of flight heritage to continue to bid into upcoming massive billion-dollar space-related defence projects?

The Hon. S.E. CLOSE: Rather than the chief executive writing some ideas for my somewhat tired brain, I will ask him to answer.

Mr PRICE: Obviously, our own satellite, Kanyini, is about getting flight heritage for the South Australian space industry. Other companies, such as Neumann, are getting space heritage through small satellites as well. Really, we are in a phase now where we are going to protect and defend the industry that we have, and that is really focused on connecting those companies into those international supply chains. It is going to be a challenge, though, without large federal projects to pull them through.

Mr PATTERSON: You talked about international companies wanting to come here and set up because they saw the opportunities of having a space agency here and federal government investment, but also in South Australia we have the defence and space landing pads. Regarding these cuts, especially to the National Space Mission for Earth Observation, have you had discussions with the space landing pad companies as to whether they are affected by these cuts? What feedback are they providing about their intention to remain here?

The Hon. S.E. CLOSE: Again, I will ask the chief executive to give the feedback that he has been receiving.

Mr PRICE: I do not wish to identify individual companies, but I have certainly spoken to at least three international companies who are reviewing their strategy for the Australian market in light of changes to the federal budget. In terms of the landing pad, it remains full with a variety of defence and space companies, and I do not envisage that there will be any availability in the next couple of years.

Mr PATTERSON: Can I take from that, in terms of allocated budget for the defence and space landing pad, that it will be continuing? In this budget, the 2023-24 budget year is the last year there is funding. Is there more funding for it in this budget, going forward beyond those years?

The Hon. S.E. CLOSE: It is continued to be funded, which is good.

Mr PATTERSON: That is good news. In terms of speaking with your federal counterparts around this, we do not want to lose the momentum because it has taken a while to get going. We do not want to go back to the 1960s, where we had great momentum and then we lost it. You have spoken to the federal minister, Ed Husic; you have said that before. Have you elevated this to the Prime Minister?

The Hon. S.E. CLOSE: I have not personally. I can have a discussion with the Premier about whether it has yet come up. I think you would understand perfectly well that it is really important that South Australia engages at that level in a very strategic and thoughtful way about how much you ask and when at the prime ministerial level. Largely, these discussions occur minister to minister and rarely do they get elevated.

The decision was made, ready for this budget, but it was clear even from last year that the minister was going to reprofile his money from exclusively space to more general advance manufacturing. It ought to be noted that Minister Ed Husic's commitment to advanced manufacturing and to science and innovation remains absolutely solid and that he invites space companies to participate in the money that sits in that part of his portfolio. It was clear that he was going to do that and that it was a rebalancing, in his view, of how much the previous government had dedicated exclusively to space.

As a state, I think we are best off building up the case with the federal government about newer projects and ways in which they can participate, rather than escalating to the Prime Minister and remonstrating against decisions that have been made. I think what we are doing is making sure that we are holding firm to our commitments, and we will identify opportunities for future partnerships with the federal government that I think they will find attractive as time goes on.

The CHAIR: On that note, it is a good place to end for the day. The allotted time having expired, I declare the examination of Defence SA complete and refer the proposed payments to Estimates Committee B for further examination. Thank you, minister. Thank you to the advisers, and thanks to the members of the committee. Thank you, staff, as well. I also thank the security officer up there, who has been really excited by the whole event. There is no-one in the gallery, so I am not sure who she is keeping safe: the public servants or us? I am not sure.


At 17:00 the committee adjourned until Tuesday 4 July 2023 at 09:00.


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