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- 26 September 2002
Royal Australian Navy Sea 1444 Replacement Patrol Boat Project
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Page: 5540
Urgent Motion
Mr FACE (Charlestown-Minister for Gaming and Racing, and Minister Assisting the Premier on Hunter Development) [4.07 p.m.]: I move:
That this House supports the Royal Australian Navy Sea 1444 Replacement Patrol Boat Project being awarded to Australian Defence Industries, Newcastle.
This is a matter of serious concern, not only to me as Minister Assisting the Premier on Hunter Development but to all members of Parliament who represent Hunter electorates, and indeed those who represent the New South Wales Parliament and the Federal Parliament. Some time ago the Royal Australian Navy called for tenders to replace its ageing fleet of 15 Fremantle class patrol boats. These 15 new vessels will perform the role of patrol, surveillance, intelligence and protection of waters within Australia's economic exclusion zone. The tender states that the first vessel will be delivered by 2004 and the final vessel by 2008. The delivery project requires a multiple ship construction program, with up to five ships being built simultaneously-something I have not witnessed in the time I have watched shipbuilding in and around the Hunter region. Tenders closed on 23 November 2001, and out of 14 companies submitting tenders Australian Defence Industries [ADI] of Carrington in Newcastle was shortlisted as one of three tenderers.
I am sure the success of ADI being shortlisted was due in part to the support given by the Premier and also the unanimous support given by this House following my speech in this Chamber on 7 November last year. I emphasise that this contract is unlike contracts awarded years ago when the Navy had large facilities for repair and ongoing maintenance of ships. This through-life support will have a tremendous flow-on effect on jobs in the Hunter region. The 15-year, through-life support of the vessels-which is worth approximately $400 million-will largely be undertaken in Darwin and Cairns, but because the shipyards are in Newcastle they will be able to provide spare parts during those 15 years. Australian Defence Industries and the Australian Defence Force recently signed a $32 million production contract, which will provide for six amphibious watercraft to be handed over by April 2005. This is a further indication of the region's competitiveness. ADI's success in winning this project is a reflection of the company's deep understanding of the Royal Australian Navy's operational and performance requirements, and in-service support needs.
Australian Defence Industries has proposed building Australia's new patrol boat fleet at Newcastle using the strategy that has produced the world's most advanced minehunting ships. The ADI tender is the only successful shortlisted New South Wales tenderer, which is truly a windfall for this State. However, as a consequence of the previous debate, I urge the House to impress upon the Federal Government the merits and benefits of the ADI tender. The Huon class Minehunter building program has demonstrated the considerable benefits of composite structures for naval vessels-strength, durability, low maintenance, low thermal signature, low acoustic signature, low magnetic signature and survivability in the event of a mine blast. ADI has in turn developed a world-class capability at its Carrington's site in Newcastle to construct large and complex composite structures for naval applications-a capability that can also be used for commercial work.
Despite the complexity of the Minehunter construction program and the fact that the composites had never previously been used in Australia for naval vessels of this size, the project is on time and on budget, to a build standard that is equal to, or better than, the original equipment manufacturer. The Swedish, Norwegian and the United States navies are already using these composite vessels. The United States Navy, in fact, is looking at composites as a potential hull form for its littoral combat ships program. The Australian Navy is aware of these developments, but as yet there appears to be no program other than the replacement patrol boat project in the defence capability plan that looks at the kinds of vessels Australia might need for littoral combat in our own region. It may therefore be timely to ask whether the Australian Navy is keeping pace with other Western navies, including the United States Navy, in very high-speed, well-armed, low signature vessels for the patrol and whether composite ships represent that future capability. As we all know, there have been many changes in the United States since the events of September 11.
Australia has a capability in composites for naval shipbuilding purposes that is probably ahead of its time-thanks to the Minehunter ship project at Newcastle, and the technology and craftsmanship that was earned from that project-thereby keeping alive and intact for the future Australia's only advanced composite capability for naval shipbuilding, which should be an important strategic issue for the Federal Government and the Defence Department. The economic and technological benefits to the Hunter region from the $1 billion spent on the Minehunter project over the past nine years may be summed up as follows: 68 per cent of the project value went to Australian industry; $887 million contributed to GDP; $494 million contributed to domestic consumption; nationwide, the project generated, either directly or indirectly, an average of more than 1,800 jobs per year; over the nine-year to ten-year period of the contract, more than 3,180 jobs were generated in the Newcastle region alone; of the companies supplying of the Minehunter contract, 85 per cent were located in New South Wales and, more importantly, 45 per cent were located in Newcastle.
This is a fantastic achievement for, and a huge vote of confidence in, the capacities and capabilities of regional Australia. The Hunter Economic Development Corporation is currently undertaking an expanded study to model the economic benefits of building the new patrol boat in the Hunter. The two other contenders to building the replacement patrol boat besides ADI are based in Western Australia-namely, Tenex and Austal. If New South Wales does not win the project jobs and defence capability of national significance will be put at risk. Now that the Minister for Defence has released his department's study on naval sector restructuring, it is more important than ever to look at the national significance of key facilities and infrastructure in the naval engineering sector. In addition, if Newcastle wins the patrol boat project, and in combination with the Minehunter build program and the landing craft built program currently in progress, Newcastle will be a centre of excellence for small naval ship design and construction in this country.
This is potentially good news for New South Wales, particularly the Hunter, because both ADI and Forgacs-both of which are major players in the repair and maintenance of Royal Australian Navy vessels-will conduct a significant amount of that work in the Sydney and Newcastle region. I moved this motion in Parliament today to gain State Government and Opposition support in bringing this major project to New South Wales. It would create possibly hundreds of sustainable jobs in the Hunter region. The replacement patrol boat project therefore becomes critical because of the work opportunities for New South Wales. It offers to bridge the gap between now and at least 2007. One of the major concerns expressed by those who have briefed me, and also those to whom I have spoken and who have some knowledge of shipbuilding-including you, Mr Deputy Speaker, as a former manager of the Newcastle State dockyard-is that there seems to be a mindset within the Navy that the only way it will accept this contract is either in steel complete, aluminium complete or a combination of both.
Together with the old Royal Navy, the Navy seems to have a mindset that composites should not be used and certainly are not equal in quality to both steel and aluminium, whereas in fact the opposite is true. As I emphasised, the United States is currently using composites. Other countries, including the Scandinavian countries, are likewise using composites. In fact, in a demonstration at the ADI workshops recently a heavy plumb-bob type of device was dropped from a height and penetrated in turn a sheet of aluminium, a sheet of steel and a sheet of composite. In the comparative demonstration, the composites fared much better than the aluminium and steel. It would be sad if the Royal Australian Navy were to go into this contract with the mindset that composites are inferior to the other two materials. As I have said, two composite ships are being used in the United States. In some of the accidents that have occurred there, considerably less damage has been caused to the structure of the ships. The United States is now leading the world, and we want to be the world leaders. I commend the motion to the House.
Mr J. H. TURNER (Myall Lakes-Deputy Leader of the National Party) [4.17 p.m.]: The Opposition will support the Government and the Minister, as we did in the November debate, in seeking to have the contract for the replacement of Royal Australian Navy Sea 1444 patrol boats awarded to Australian Defence Industries [ADI] at Newcastle. We do so without seeking to interrupt the proper tender process. I understand that three companies have been shortlisted to tender for the supply of the patrol boats. These have been signed off by the Federal Minister for Defence, Robert Hill. We are pleased that the Federal Coalition Government has again become involved because it was stated Australian Labor Party [ALP] policy that the building of these patrol boats would have been scrapped under a Federal Labor government. It is good to know that the Federal Coalition is honouring its obligation to proceed.
The shortlisted tenderers are ADI, which works out of Newcastle; Defence Maritime Services [DMS], which is partnered with Austral, and Tenex. If Tenex or DMS is successful they will build the boats in Perth and ADI, if successful, will build them in Newcastle. We would prefer ADI to get the job so that the work is done in Newcastle; it will provide significant economic and employment opportunities to the area. I am told that the competition for stage two final shortlist was intense. That highlights the fact that we have a competitive small vessel building industry in this country. Nine companies provided tenders, seven of which qualified to produce the vessels. The shortlisted tenderers were selected through a process based on merit in accordance with the criteria laid down in the request for tenders and the information offered in the company responses. The three companies selected to go to the next stage of the tender met the Australian industry involvement targets for construction of 65 per cent and for in-service support of 90 per cent.
The boats will operate primarily out of Cairns and Darwin. That does not alter the fact that they can still be built in Newcastle. Other areas will benefit as individual systems and equipment fitted to the boats may come from other parts of New South Wales. After evaluating two possible procurement options, the Federal Government has decided to directly purchase these boats, using private finance to deliver the boats and associated through-life support. However, advice provided to the Government indicated there was uncertainty about whether the prerequisite capability could be provided on a value-for-money basis while also ensuring that the transaction would be classified as an operating lease for accounting purposes. We need not concern ourselves with those matters at this stage, as we are more concerned about ensuring that this project comes to Newcastle. However, that is part of the process.
These boats will replace the current 15 Fremantle-class patrol boats that have served the Navy well but are ageing and are costly to maintain. The new vessels will provide the men and women of the Royal Australian Navy who operate them with more capable, modern and reliable vessels to help them better to protect Australia's coastline. They will also provide the Navy's patrol boat capability for the next 20 years. The Minister commented on how the boats will be made. The boat from ADI is a patrol boat based on the Danish design Stanflex 300. The ship will be built using a glass-reinforced plastic foam-core sandwich construction, similar technology to the Minehunter coastal vessels. One hopes that the fact that ADI is willing to use this new technology will not count against them in the final consideration of tenders.
The cost of the replacement patrol boats is expected to be around $375 million. That will provide a significant boost to the Hunter economy and the economy of New South Wales if ADI is successful in obtaining the right to build these new boats. The new boats will provide 3,000 operational days per year, of which 1,800 days per year will be directed towards Coast Watch operations, which, as we know, are important. In addition, the boats will have a search capacity of 600 additional days per year to deal with short-notice contingencies. On average, the current Fremantle-class vessels have achieved about 2,700 operational days per year. The new boats will have a range of 3,000 nautical miles and will provide a 25 per cent increase over the range of the Fremantle-class boats.
They will also have the capability to conduct two concurrent boarding operations at extended ranges from the patrol boat, with two sea boats compared to the single boarding capacity of the Fremantle-class vessels. The boats will also be able to operate in a greater range of sea conditions, further improving their use at sea. They will have the capacity to carry up to 28 people in austere accommodation, whereas the Fremantle-class vessels have no dedicated additional accommodation. The state-of-the-art stabilised guns should improve control and accuracy in rougher weather to support a full range of surveillance and interdiction roles. The boats will also be capable of providing a greater level of surveillance capability by spending up to one-third more days at sea.
Obviously these are purpose-built boats. They will provide an immense service to the Australian public by being able to undertake duties guarding our coastline and carrying out border protection. Regrettably, in the uncertain world we live in at the moment, they may have a more active role to play at some time further down the track. The main thrust of this motion is to ensure the ships are built at Newcastle. Newcastle has the expertise to do it; it has a long history of shipbuilding. The honourable member for Maitland would know from his days at the State Dockyard that Carrington and the other ancillary shipbuilding activities in the region have the necessary knowledge, the manpower and the determination. All they need is the contract.
Mr BARTLETT (Port Stephens) [4.23 p.m.]: I support the urgent motion moved by the Minister for Gaming and Racing. If Australian Defence Industries [ADI] wins the right to build and maintain these 15 patrol boats for the Royal Australian Navy it could be worth, over time, up to $700 million. ADI estimates that winning the contract would result in its work force growing from about 160 to about 500 people. It is estimated that a further 2,000 indirect jobs will be generated in related local subcontract and supply companies. If ADI wins the patrol boat contract because of its composite material, which we believe is out of favour right now with the Royal Australian Navy, it will build the boats at its Carrington shipyards in Newcastle using its advanced composite instead of steel or aluminium. The use of that composite will extend the life of the boats from around 20 years to up to 40 years.
The composite is used in aircraft construction. Two or three years ago I had discussions with the purchaser of Impulse Airlines, which operated a Beech 500 aircraft. The builder of that craft was looking at using the composite for moulds for the fuselage of their future Beech aircraft. That would have saved hundreds and hundreds of man hours of riveting steel and aluminium together. The composite could have been put into a mould and made a much stronger fuselage for the aircraft. The same composite material can be used, with its strength and durability, on the patrol boats required by the Royal Australian Navy. Australian Defence Industries has completed a most successful Huon-class Minehunter project in the Newcastle area. The project was completed on time and on budget, and the vessels are performing well for the Navy. No other surface ship has been built in Australia with such advanced integrated electronic systems. They are complex vessels but they are all performing up to the required standard. Because of that project, Newcastle now has a world-class shipbuilding facility served by a highly skilled work force.
About 850 local businesses contributed to the project, which at its peak employed 580 people, most of them from the Hunter. We are now facing another problem. It has been claimed that in the 1960s and 1970s the State dockyard had poor manning practices, poor compensation provisions and a poor industrial record. Newcastle has taken stock of all that and has moved forward to the point of producing first-class ships on time and on budget. Suddenly, now that ADI is world-class and competitive, the Federal Government is considering an industry rationalisation scheme. The fear is that the Federal Government will rationalise the Hunter out of shipbuilding, because it has announced its intention to replace competitive tendering for defence shipbuilding with long-term relationships with preferred suppliers.
It now looks as if we will go down the track of "mates rates" for naval shipbuilding. Yet the Hunter has spent 10 or 15 years moving from its antiquated industrial base and practices to brand-new industrial practices with composite materials. As the Minister said, Newcastle is at the forefront of world technology, ahead of America and Sweden, where 72-foot ships are manufactured using composite materials. We are at the cutting edge of new technology for shipbuilding. Following the experience with the State dockyard, the rules of the game will be changed; tendering will no longer apply for shipbuilding contracts. The system will be rationalised, and preferred suppliers will be looked after. These composite ships are excellent for the Hunter. We have the skills, the technology and the work force to put it all together. I commend the motion to the House.
Mr HAZZARD (Wakehurst) [4.38 p.m.]: I support the motion moved by the Minister for Gaming and Racing. Although I had intended to speak at length on the motion, I note that the Premier has entered the Chamber to move an important condolence motion. Therefore, I shall speak briefly on behalf of the Opposition. The Opposition understands that ADI has a proud and efficient history in the Hunter in the construction of boats. As previous Opposition speakers said, we would not seek to influence the tender process in any way. However, we will join with our colleagues opposite in asking the Federal Government to give serious consideration to granting the tender, all things being equal, to ADI in the Hunter. Recently ADI has had much success in constructing Minehunters. Based on ADI's experience of developing and constructing six Minehunters, and other work it has been doing, the Opposition is of the view that it has the capacity to undertake this contract with a great degree of excellence. The Opposition supports the motion.
Pursuant to resolution business interrupted.
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