Consideration in Detail - Defence Industry

Federation Chamber - BILLS - Appropriation Bill (No. 1) 2019-2020 - Consideration in Detail

Watch Matt's speech here

Mr KEOGH (Burt) (17:32): I thank the minister and the member for Fairfax for the bit of a comedy routine that we've just had in the chamber. The only defence the government have to any of the questions that they are asked in this process seems to be to point back to their view about a government we had over six years ago. They're now on their third Prime Minister, so I can understand that they've forgotten that they've been in government for six years and need to take a degree of ownership for some of the things that are not working. I have to say that I thought it was particularly interesting when the minister referred to the Integrated Investment Program being updated and available online. It's true that the government's documentation for 2016 does talk about that. It's just that it hasn't actually happened. So, when the minister refers to that information, I would encourage her and ask her to please point us to the web link where we can find this updated information on the Integrated Investment Program.

When it comes to the defence industry in particular, I do want to say that government decisions to require Australian industry content in our procurement processes for defence are a good thing. It's true that these sorts of decisions to procure locally can cost more in time and money, but over the long term they should pay dividends in terms of tailored capability for our defence needs and priorities, industry development, the creation of jobs, local sovereign capability creation and export potential. As I said, how we as a country are going to go about doing this is set out in the IIP. Unfortunately, as was referred to by the member for Shortland and others, we don't have the current information in respect of how that program is continuing, its spend and the delays that are occurring compared to what the government said would occur back in 2016.

As was referenced earlier, ASPI has set out in its report on the cost of defence that it would appear that right now we have an underspend of the IIP, a shortfall that now totals over $5 billion since just 2016 and the release of the white paper. Critically this has meant the unfortunate situation where less than one per cent of the defence budget now goes into innovation funds. That must be increased. ASPI says:

Currently, less than 1% of Defence’s budget goes into its innovation funds. That must be increased, and in a way that connects innovation to the large, well-funded programs in the IIP.

It's fair to say that, as set out in the IIP, they are well-funded programs. Expanding a mature defence industry will also provide manufacturing and employment opportunities to provide a ballast against swings and downturns in other industry sectors that are susceptible to global market conditions, thereby providing diversity and strengthening Australia's economy and better insulating it and its workers from global economic shocks.

The Australian government should be working with industry across sectors to assist them in diversifying themselves into the defence industry supply chain, making the best of the innovations, research and development work that Australia already excels in that can have an application in defence—areas such as the resource industry. I know the Minister for Defence Industry is very well acquainted with it. There's great skills development, innovation and research happening in those areas and others that could be brought to bear in defence, and government should work to assist that.

Defence should also do more to make sure that defence industry in Australia is not merely shipbuilding labour hire. It should instead support the development of local sovereign design capability, developing our own intellectual property here in Australia to make sure that we are not just a shipbuilding labour hire country but one that is able to design its own capability, able to design ships in Australia and then also build them. An established defence industry sector will provide certainty of employment and training opportunities for the next generations of Australian skilled workers. But it shouldn't just be in the trades. It should be around design. It should be around those highly technical areas in which Australia could be building jobs for generations to come into the future.

Finally, defence capability procurement and sustainment decisions must be made in the national interest and not as a way of managing political footballs for the Senate crossbench. The question is: when is this government going to get serious about Australian industry content? When will it update the public on the progress of the Integrated Investment Program? What is it going to do about making sure we're not just a labour hire country when it comes to shipbuilding and that we are generating our own capability and design? When is it going to let us know? Minister, this is what I want to know: what are the requirements for AIC in the contracts that you have been letting, how are they being monitored and how are we enforcing that Australian industry content is actually happening in our defence procurement processes?