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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
2016-03-23 Daily Xml
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Defence Shipbuilding

The Hon. T.T. NGO (15:30): We are learning more and more about our hapless Prime Minister, Malcolm Turnbull. I have already spoken about how Mr Abbott's previous announcement of a continuous build of defence projects for South Australia is now in turmoil due to Mr Turnbull's lack of commitment to build the offshore patrol vessels in South Australia.

Recently, the Turnbull government announced shipbuilder Navantia as the preferred tenderer to construct two of our Navy's newest supply ships worth up to $2 billion. These ships provide logistics support during combat by supplying oil and replenishments to Australia's naval vessels. Mr Turnbull's defence minister, Marise Payne, defended the Liberal's position by saying:

…the Common User Facility in Adelaide, which supports your ASC, our ASC, was not capable of accommodating the large supply ships as the current ship lift would require to be significantly lengthened in order to carry vessels the size of the replacement supply ships.

In 2014, the Liberal government announced that only two companies—Navantia, from Spain, and DSME, from South Korea—were allowed to participate in the tender process. The Liberal government excluded Australian shipbuilding companies from the tender. The then Liberal defence senator, Senator Johnston, blamed the poor performance of Australian yards on the AWD project as one of the reasons to exclude Australian companies. He said:

No responsible government could consider providing further work to an industry that is performing so poorly... This is not a blank cheque.

However, in late 2013 ASC put in a formal proposal for a plan to build three supply ships for the price of two in partnership with South Korean company DSME, which is, incidentally, one of the two companies allowed to participate in the tender. The CEO of ASC, Steve Ludlam, said that the project was the only one that would benefit shipbuilders nationwide, with work to be allocated to several different shipyards, including Williamstown, Newcastle and Osborne.

The ASC's proposal was to build the first two ships at the world-class facilities in Korea with DSME. Since 1973, it has built and delivered over 1,000 ships on schedule without exception. ASC proposed to build the third ship in Australia once we had picked up the necessary capability and skills from Korea. ASC said:

Building the third warship will preserve our skilled engineering and production workforce after we complete the Air Warfare Destroyer project and prepare to compete to build the Future Submarine.

This sounds like such a sensible proposal to me and to many ordinary Australians. Any logical government should be looking at this model to build and maintain its workforce.

If the Liberal government does not like the Korean company, then why can we not engage in partnership with Navantia so that our workers receive the knowledge they need to build this type of ship? The Turnbull government has no interest in building up the capability of our workforce. They are happy to raise the white flag on our defence industry.

It is the very issue of workforce attrition, lack of ongoing training and development that contributes to the massive set-up and decommissioning costs that the Liberals are using to stop Australian companies from participating. The Liberals continually argue that Australia does not have the capability and skills to build these large ships. How can the Australian shipbuilding industry build its capability and skills if there are no long-term plans and commitments for their industry?

To add salt to the wound, the Turnbull government has only locked in 5 per cent of the contract's procurement outlay for our local industry. This is a paltry $100 million from a $2 billion contract. Many Australian workers in the shipbuilding industries have lost their job, and many are worried whether they will have one tomorrow. Spain is not only celebrating 3,000 new jobs courtesy of the Turnbull Liberal government, they are also bragging about other future shipbuilding projects from Australia.

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