O'Neill, Sen Deborah

CHAIR ( Senator O'Neill ): I open this public hearing of the Joint Standing Committee on Foreign Affairs, Defence and Trade defence subcommittee in relation to its inquiry into the Department of Defence annual report 2023-24. This hearing will be broadcast on the parliament's website, and the proof and official transcripts of proceedings will be published on the committee's website. I now welcome representatives of industry to give evidence today. They will be followed by representatives from the Department of Defence and the Australian Submarine Agency. This hearing is a legal proceeding of the parliament. The giving of false or misleading evidence is a serious matter and may be treated as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. I now invite you to make an opening statement before we proceed to discussion. Mr Stewart : I'd first of all like to thank the committee for the opportunity to speak today; it's extremely well received. For Austal, this is a very exciting time for us, as we have been nominated as the strategic partner for the Commonwealth for shipbuilding in WA. We see a fantastic future for our business and also for local industry within Henderson, and we look forward to working with the Commonwealth over the years to deliver fantastic capability to the Navy and Army. CHAIR: Mr Jackson, do you want to add anything? Mr Jackson : Nothing further to add. CHAIR: I'll just ask you something straight up, then. Mr Jackson, as the facilitator of the capability dimensions, what are the critical challenges that you face right now at Austal? Mr Jackson : I think it's the broader precinct challenges that we have. The primary focus will be facilities and workforce, getting the decisions necessary to enable us to commence the landing-craft-heavy project, in particular, towards the end of next year and then building the workforce over time that we'll need collectively, in the midst of a variety of other activities that are planned for the precinct itself. CHAIR: Let's just get this on the record for the public. The precinct that you're talking about, while we're taking evidence here in Western Australia, is the Henderson precinct. It's a precinct in which currently there is a lot of industry as well as the development now of a defence presence in a very significant way. There's co-location with a lot of suppliers into the mining, gas and oil industries here in Western Australia. That's the first thing. So there's integration, opportunity for innovation but also challenges in terms of space, which the committee observed yesterday, and access into the community. That's one of your physical challenges right now with regard to creation. The second thing that I think is important to put on the record is the type of ship that you were just talking about then—the LHDs? Mr Jackson : Landing craft heavy—the LCH. CHAIR: Do you want to explain what that is? The committee has just come from Darwin, where we spoke with Army, Navy and Air Force, and they mentioned the LCH and the LCMs to us. Mr Jackson : The LCH is 100-metre steel-hulled vessel based on the Damen LST 100, which is currently in service with the Nigerian Navy. They're probably the largest steel ships that would have been built in the precinct, and it requires us to extend our existing Austal footprint into the AMC CUF area to support the build of a vessel that size. CHAIR: What's the AMC CUF? Mr Jackson : Sorry—the Australian Marine Complex Common User Facility. CHAIR: Which is what we casually call 'Henderson'? Mr Jackson : The Henderson precinct is made up of that broader strip, which is a number of private companies as well as the state owned infrastructure that's down there. CHAIR: What will the LCH do? What is its functional role in the Army? Mr Jackson : It's there to provide littoral manoeuvre for the Australian Army. It's basically taking the Australian Army and its assets out into the archipelagic region so they can position there to support their deterrence-by-denial framework. CHAIR: There's a big challenge there. This is a shift in the type of building. Certainly most Australians wouldn't think that Army needs ships, but that is part of the defence strategy and of Australia facing our geographical reality, with Darwin as our most significant northern site out of which this will operate. If I can go to the challenge of building such a vessel and the urgency for its need and creating the workforce to undertake that work, how is the program that the government has laid out and the significant investment going in terms of delivering the workforce you need at the pace you need it, Mr Stewart? Mr Stewart : First of all, it's our responsibility as a business to make sure that we have the workforce ready and the capability required as well as working with local industry to help them grow their capability to support this program as well. Under the Strategic Shipbuilding Agreement, there are two pilot programs. As you mentioned, there's landing craft medium. In landing craft medium, we know that we can build that craft within our own facilities currently, within our current workforce and within the current supply chain that we currently use. So we see that as just business as usual. When we move to landing craft heavy, we recognise that there's a requirement to lift capability but also to grow capacity as well. So we've been working with local businesses and with the Commonwealth on how we need to grow the capability and how we're going to grow the capability with growing our own workforce. But, more importantly and as importantly, we're also looking across the ecosystem as well to make sure that we understand what businesses we should partner with and what ones should be part of the supply chain to allow them to be fit and ready for landing craft heavy, which commences next year. CHAIR: So those additional partners, small to medium enterprises, would operate under you as a prime? I think that's a fair description in the common way. Mr Stewart : Yes. CHAIR: So, at the prime level, you're the major provider, and underneath there's going to be a whole chain, or perhaps we might even call it a connected set or a net of providers who are going to create workforces themselves to build the kinds of elements that are necessary for the construction of the whole vehicle, whether it's a medium or a large. Mr Stewart : Yes, and, as spoken of, this provides an opportunity for businesses to look forward for the next 12-plus years. Previously, there's always been a concern in shipbuilding that it's peaks and troughs, so the work has never been as safe as what it is now. So now businesses can actually see a future in shipbuilding, which is fantastic for generations to come. When you look past the pilot programs, you then move into general-purpose frigate, so we're getting ready for the next 20 or 30 years of build programs coming through here. CHAIR: And this isn't the way the sector has been operating in the last 20 or 30 years. This is a very significant shift that's driven by the 2023 defence strategy and then the national security and sovereignty that is now embedded in that National Defence Strategy. It reflects the government's commitment to continuous naval building and sustainment. It's a very different model of potential jobs for young Australians and older Australians who want to retrain. In what way do you see this changing the workforce? Mr Stewart : The industry has continued to struggle with capability due to other industries. It's very difficult in defence to compete with the resource sector, as an example. What we're seeing now is that there are a lot of people that maybe left defence and have tried the resource sector and now recognise, 'You know what—we actually can come back to defence, go home to our families every night and have good-quality time with the families as well as a really good career opportunity and longevity within defence now.' That's never been there for defence employees before. It's always been, 'Let's see what the next one or two years is going to look like.' Now we've got the ability to say, 'We've got an order book of 12 years, plus we've got another order book for another 20 or 30 years as we negotiate and work with the Commonwealth to onshore the Mogami class frigates as well.' CHAIR: We've only got you for a short time, so I'm going to ask one more question and then go to my colleagues. We've got $1.5 billion invested by the government in fee-free TAFE. We've got $250 million to attract, train and retain nuclear powered sub workers and to get that knowhow. We've got a skills and training authority. We've got a maritime workforce skills council, bringing together industry, trade unions and government. All of that is going on, but still you are facing challenges in getting the workforce you need for the quick uplift while our workforce is under development for the longer term, where people can now anticipate a 20- or 30-year career in one industry and in one place. So what's the nut that we need to crack in the next little while? And I am hearing a Scottish accent answering this question! What do we need to do to improve the quality, the scale and the capacity of our current workforce, in a timely way, to get on and deliver these things on time? Mr Stewart : This is multilayered, I'm going to say. It's very complex—the solution that we require—just now. There are a number of things. One is that we need to make sure that we can get out to the TAFEs and universities and the schools and colleges to show them, to demonstrate, that ship building is actually quite exciting. So there's a long-term opportunity there about: 'How we do shipbuilding today is far different to how we did it 20 or 30 years ago,' and we can attract a different calibre of individuals, young adults, who actually want to come in to shipbuilding and see that they've maybe got 30 or 40 years of a career opportunity in front of them, where they're not necessarily going to be welding all day or doing what we used to do years ago. So we're looking at: 'How do we attract young talent into shipbuilding?' On top of that, as I said earlier, we're looking back at the talent that has maybe moved to different industries and saying to them: 'You know what? There's an opportunity to come back in now. We can guarantee jobs for a long time now. So there's an opportunity to make sure you go home to your families.' But then, on top of that, we have also recognised—and I mentioned this in this same conversation, I think last year or the year before—that we need to do something around enabling skills to come into this country quicker and easier. It's far too difficult for us to go and engage someone with high experience, because we don't have the level of skills that are required today to meet—especially when we look at general purpose frigate and at AUKUS nuclear submarines. We need to do something that enables the visa system to allow us to bring skilled workers into Australia to help us train up our young or high potential people, to bring them up to the standard that we need, and, with the visa situation and the security situation, it's unfortunately very, very difficult for us to do that. We can do that in the ones and twos, but even the ones and twos take a long time to do. But you see, when you're looking at the number of people that we need to bring into WA, Henderson, over the next one, two, five or 10 years, its multitudes of thousands of people that we're going to have to bring in, and we need high experience to help them on their journey to grow that capability. CHAIR: In terms of the visa situation, a shorthand version of that has been described to us as an 'AUKUS visa', which would deal with issues of quicker access and also the security clearance matters that are attached to that. Can I invite you to take a question on notice and write to the committee to give us your thoughts and ideas, and perhaps some vignettes of the kinds of challenges that you've faced, on where the stickiness in the situation is and what it would look like if we were going to meet your needs in a timely way—attending to national security concerns, which are really pressing at this time. That would be very helpful. The committee will write to you and give you a direction with regard to that, but we need to get on the record the actual practical problems. I'm going to go to Mr Rebello for the first lot of questions and then next I'll come to you, my colleagues.