Defence Industry Australian Content - Appropriation Bill (No. 1) 2021-2022 - Consideration in Detail

By Matt Keogh MP

15 June 2021

Watch Matt's speech here

I wish to draw the chamber's attention to our Australian government's interpretation of the meaning of 'Australian' content. You see, when it comes to defence work you don't have to be doing defence work in Australia. To be counted as doing defence work in Australia you could in fact be going about your business running a hotel, teaching French or booking flights. In fact, in Australian defence work you don't have to be an Australian company or even from New Zealand to be doing defence work as an Australian. You just have to look at the others that are included. You don't actually even need to be an Australian incorporated entity, even if owned entirely by an overseas entity. You merely need to be a foreign business registered in Australia. But you don't even have to be in Australia to be doing Australian defence work. Australian nationals who happen to be working in France on the future submarine project will count towards NAVAL group's promise to spend at least 60 per cent of its contract with local Australian industry. They don't even go here. These are all features of the latest details to emerge from the amendments to the strategic partnering agreement, the SPA, for future submarines. Yet this critical document, obtained via freedom of information, has kept secret the definition of 'Australian contractual expenditure'. That bit is redacted. It says a lot about the Morrison government, when it wants to keep that definition secret.

We all know this just continues the government's view that hotels, French language lessons and security guards constitute Australian defence industry content. But if they beat that 60 per cent milestone, or the redacted milestones that we can't actually see in the SPA along the way, it would appear that NAVAL group will receive a bonus. But what happens if NAVAL, or other international primes in contracts that we haven't seen, fail to meet their local industry spend obligations? Is there a penalty? Is there a consequence? None that's evident, unless again that's also in the redacted content of the agreement. Maybe it's just a slap on the wrist. Maybe there's no financial implication whatsoever. Maybe there's even a pat on the back from the Minister for Defence Industry or the Minister for Defence. We don't know because the government is keeping all that secret. 'We don't want to talk about it at all.'

Back to the 'they don't even go here' problem. The SPA reveals that local industry activity value includes the direct labour cost of Australians temporarily working in France. But what is temporary: a week, a month, a year? Is temporary from now until 2035, when the first sub will be in the water allegedly, or working through until the last sub in 2054? Temporary, indeed. Does this mean that the first or more submarines are actually now being planned to be built in France? Hundreds of workers in the defence industries in shipyards across the country, particularly in Osborne and Henderson, are hanging out for this work. But they remain in limbo while the federal government drags its feet and second-guesses itself and its defence department on a variety of projects in terms of scope, timing and the use or the development of Australian industry capability. And then, of course, there's always the confidential plan B that we heard about in estimates.

This Liberal government has proven time and time again it doesn't support Australian companies doing Australian defence industry projects. At the Land Forces exposition a couple of weeks ago I met a Western Australian company, Chronix, that was earmarked to receive $1.2 million in funding from the US government for its involvement in an awesome project, Project Simpson. All that the US government has been asking is for the Australian government to contribute about $800,000. I had more conversations, more than I can probably count, about Australian businesses that are doing excellent work in supply chains for other forces, supplying the Americans or the British, but fighting with one arm tied behind their back because they can't demonstrate that they're getting any work out of Australian defence. They can't point to their local work. It seems completely illogical, and so I ask the minister: why is it that foreign countries are supporting Australian SMEs better than the Australian government? Why hasn't the government joined Project Simpson? What is the definition of 'Australian contractual expenditure' under the future submarine SPA? Why is the detail of what constitutes this Australian content or, indeed, any penalties for not meeting that obligation being kept secret? What else does the government have to hide?