Speeches

JCPAA REPORT INTO THE INQUIRY INTO THE 2018-19 DEFENCE MAJOR PROJECTS REPORT AND THE FUTURE SUBMARINE PROJECTS

December 09, 2020

I rise to talk to the tabled Joint Committee of Public Accounts and Audit inquiry into the major projects report, which I had the privilege of serving on the committee for the duration of. The government likes to talk about their commitment. In fact, they brag about it. Normally, at the end of question time they throw a bone to the Minister for Home Affairs, Peter Dutton, and they let him talk for defence for three minutes as a way of reminding suppose he's supposedly still relevant. His entire dixer can be reduced to one sentence: 'We're going to spend more than two per cent of GDP on defence; therefore, we're strong on defence.' That is literally the entire dixer. 'We're spending two per cent of GDP on defence; therefore, you can trust us on defence.' They hold up this two per cent commitment as a some sort of magical talisman to hide the fact that their performance on defence is woeful.

It has always been woeful. They have a history of hopeless performance on defence, from Prime Minister Menzies advocating for appeasement 10 days after Hitler invaded Poland—not a couple of years beforehand; 10 days after Hitler invaded Poland, Menzies was advocating for appeasement. Or there is the fact that they took us into Vietnam based on a lie—a lie that cost 500 Australians their lives. Or there is the fact that they took us into the second Iraq war based on another lie. The coalition cannot be trusted on defence. I'm sad to say that this report goes to this as well, because this report is all about the failures of this government to manage the defence acquisition portfolio.

They talk about spending, but the fact is that since 2016 this government has spent $6.7 billion less than they promised they would on the acquisition of new defence capital. Let me repeat that: the defence capital budget has been underspent by $6.7 billion since 2016 under this government. They literally cannot spend the money effectively or appropriately. That means that our troops, the ADF, are not getting the equipment they've been promised—in fact, the equipment they've been budgeted for. What's the inverse of this? It means we're running our existing equipment longer and harder than we need to or that we planned to. We've seen a $4.2 billion blowout in the defence sustainment budget during the same period.

At the time as we're spending an extra $4.2 billion more than we're budgeted for, we're actually getting significant underperformance in the availability of our platforms. For example, Naval fleet vessels are available for 14 per cent fewer days than are planned for, RAAF aircraft are available for 21 per cent fewer hours than budgeted for and helicopters across the entire ADF are available for 26 per cent fewer hours than budgeted for. So this government has managed the quinella: they're spending $4.2 billion more on sustainment, but they're delivering a lot less availability than our ADF needs.

When you come to individual acquisition projects that they canvassed in the major projects report, the quarterly performance review and every other effective oversight that this parliament has, this government's performance is woeful. On submarines, for example, we've got a $39.7 billion blowout in the cost of the submarines. Then Prime Minister Abbott—we've had a couple since him—got up in the middle of 2015 and committed to 12 new regionally superior submarines for an out-turn cost of $50 billion in then dollars of expenditure, not constant dollars. Now what is the cost of those 12 regionally superior submarines? It is $89.7 billion, a blowout of $39.7 billion.

And what about the timing of this? Prime Minister Abbott said that these submarines will be available in the mid-2020s. They're now at best going to begin to be available in the mid-2030s. So there is a $37.9 billion blowout and a 10-year blowout in the schedule. The flow-on from this is that now, as the member for Solomon so eloquently talked about, we're going to have to extend the life of the Collins class submarines. They are great submarines, but we're running them for a lot longer than we planned. Therefore, this government is now planning a life-of-type extension for those submarines, and that will cost at least $3½ billion.

What's the second largest defence acquisition this government is managing? It is the future frigates, the Hunter class. They're in in their early stages, but we've already seen a $15 billion blowout in them. They were promised to be acquired for $30 billion. Now they have slipped in a price update to $45 billion, increasing in the cost of these submarines by $15 billion, 50 per cent of the project cost, and they've haven't even begun cutting steel yet.

This is all in the design phase. We're seeing major problems with that. We're seeing challenges around weight issues, the fact that these frigates are blowing out in their weight, which will affect their performance and cost.

What's another large project this government has mismanaged? The air warfare destroyers, which were delivered 40 months late. The project was supposed to be reasonably off the shelf. They chose the Navantia F100 model, compared to a cut-down Arleigh Burke, because it was off the shelf: We were going to copy what the Spanish had done. They still managed to deliver it 40 months late, and they've delivered it with final operational capability without a key capability. They've delivered and declared full service but the AWDs won't have radar or electronic attack, which is a key capability that the navy needs.

I have a range of favourites, but my particular favourite is the C27 Spartans, the battlefield aircraft that replaced the mighty Caribou. This is a $1.5 billion project which, as we found out through these hearings, can't fly into battlefields. Let me repeat that. We're spending $1.5 billion on a battlefield airlift aircraft that cannot be flown into battlefields. One would submit that that's a tiny problem. They're being delivered without this key capability, at least three years late.

This is a government that is hopeless on defence. The Joint Strike Fighter is another case where the government slipped in—through these hearings we established the truth—they tried to hide a $1½ billion cost blowout. Through these hearings the committee established that we are spending $16½ billion on these aircraft, but we're only getting $15 billion worth of capability, because two critical capabilities, maritime strike and beyond-line-of-sight communications, aren't there properly. They're just not there. We sign up to a contract that says you're going to get all these capabilities for $16½ billion, but now we're only going to get $15 billion worth of aircraft.

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