Senate Foreign Affairs, Defence and Trade Legislation Committee, , 5:59:49 to 7:30:34
The committee scrutinizes design risks for the Hunter Class Frigate and reviews Australia's ongoing military and material support for Ukraine.
Topics: Procurement, National security, International law
Speakers: Celia Perkins, Hon Sarah Henderson, David Shoebridge, Jessica Collins, Hugh Jeffrey, Admiral David Johnston AC RAN, Ellie Whiteaker, Greg Moriarty AO, Hon Jenny McAllister, Hon Michaelia Cash, Mark Hammond, Peter West, Raff Ciccone, Sheryl Lutz, Speaker 29, Speaker 31, Speaker 32, Speaker 7
>> uh Senator Henderson will take over this
>> Okay. Thank you Senator Henderson. Uh
thank you very much chair. Look I just wanted to return to the defense property asset sale. Uh secretary could you just confirm has defense estimated or the government est or the department estimated remediation for each particular site >> the remediation costs.
I think that there has been some work done on on that but the the specific remediation costs of of course will require some some further work.
>> So there's we've had the global figure but just I I think you were going to come back on notice in relation to the
>> Thank you Senator. Yes, that's correct. Um but I can describe the process by which uh we work through that. Um we have um very good data.
>> Just firstly to the costs. Do you have the costs for each site?
>> No, not yet.
>> Oh, right. Uh and do you have the costs for any site?
>> Uh I've taken that on notice, so we'll just need to work through that.
>> Okay. Look, just putting aside the process, uh obviously defense, as we've heard extensively, has been in negotiations and continues to be in relation to devestment of a range of sites. I just want to draw your attention to 310 secure road which was proposed for sale to Melbourne City Council a number of years ago. Do you know what the estimated remediation costs were at the time?
I'll take that on notice, Senator. Um that site's a little bit different in that um it was more about um uh renovation and restoration of the building rather than contamination remediation.
>> Sure. Sure. But uh I I mean I guess I raised these concerns because Melbourne City Council decided not to proceed with the discounted sale as I understand due to the extent of the remediation costs.
Uh I would say on the 310 St Kilda road site that two approaches to market occurred. the first with um the Victorian government, the second with the Melbourne City Council uh on a fair market value um basis and you're correct um uh the Melbourne City Council chose not to continue with that
>> sale. So that was the devestment that was approved by Assistant Minister Stewart Robert. Would that be correct?
>> Well, there was no devestment minister
was listed for devestment. It's still surplus.
>> That that's exactly right. So the devestment didn't proceed.
>> Yes. Mr. Roberts, that was Mr. Robert's decision, was it?
>> The devestment didn't proceed because of the extent of the remediation cost. So there were very advanced negotiations with Melbourne City Council. And in fact, the building was going to be repurposed as a veterans well-being hub supporting a number of ex-service organizations. So is there anything more that you can tell us about that, Miss Perkins?
Senator, I um wouldn't uh propose to describe why uh the uh from my perspective why um the Melbourne City Council chose not to continue with that process. Um the government at the time took the decision and we've spoken about this in this committee a number of times uh to undertake some remediation work of the site which had been vacant since 1998. Um and we developed some plans for adaptive reuse of that facility uh within the broader Victoria Barracks Melbourne precinct. Um, so we took it off the market at that point uh in um uh 20 uh 2122.
Um I see. Miss Perkins, do you know whether any of the sites on your list are contaminated with ordinances, >> buried ordinances, ammunition and the like.
>> Yes. So um in both the work that the independent audit audit team undertook uh and the work we've done and the analysis using our knowledge of the sites a great number of those sites uh we know uh what kind of contamination is there we may have already done investigation work or we have a reasonable expectation based on how the site had been used. So for instance, there are a number of rifle ranges uh listed in the devestment sites. Um we uh take great care um with cleanup on ranges, but we would have a reasonable expectation that more work would have to be done around um some level of
contamination. So on notice, could you list the contamination for each site? So that work has been done over over and above what's already been released publicly. But if there's been more extensive work done on the contamination of each site, could we please have a copy of that advice?
>> What what I would describe to you Senator in the work that we've done site by sight is to uh understand what we already know and capture that and from that um determine reasonable estimation of what more would need to be done. in most cases to meet our legislated obligations um that will require more environmental investigations and that will inform the remediation that needs to follow.
>> Okay. So there's a long way to go in determining the extent of the remediation's >> cost given you have not ascertained how contaminated these sites are or some of
>> Um there is work to go. uh this is work that we do commonly uh and in some of the sites have already undertaken. I'll give you one example. The partial devestment of the uh uh back part of Randwick barracks we had been progressing plans um for living in accommodation on the site. We have already taken undertaken extensive environmental investigations uh and remediation. Uh we've been working with community. All of that work is published online. So there are some sites we're in a very mature state uh and there are some sites where there will be more work to be done.
>> Okay. Uh what about contamination with asbestous?
>> Uh yes that would be quite common given the age of these facilities.
>> Can I ask whether defense considered alternative models to a selloff particularly of these historical sites are there mo and there are models in play. I know for instance Navy has repurposed a lot of its historical sites. Sydney Harour's facilities have previously been transferred into trust and the like. So did was consideration given to alternate models rather than this horrendous fire sale?
>> Um I think what you're referring to there was some some work um in the 1980s and 90s uh that transferred properties to the Sydney Harbor Foreshore Trust. Uh as we've um discussed today uh the model the government has agreed is that the department of finance will undertake the devestment activities and they will be establishing um the the the model and the approach um for those sites.
>> No no I realize that but I'm asking were any alternative approaches considered?
>> Uh the independent review um that was published last week describes the recommendation to government. The government's response to that it is in the rear that is to uh work to achieve um market value for those sites to reinvest for defense capability.
>> So no other alternative approach was
considered. I think the significant thing here in some ways, Senator, is that a clear plan has been established. And one of the things that the review observes is that in the past, attempts to consolidate and rationalize property holdings have been stymied by a lack of political and organizational will to overcome challenges. And as a consequence, they go on to say that defense is holding more property than it needs and is carrying the burden of past indecision to reorient the state towards more contemporary and future needs. And I just keep coming back to this concept, Sarah Hend, Senator Henderson. Um, sorry, I was looking at your name plate.
I think that's okay. You can even call
me this concept, Senator, which is that >> the purpose of the estate is to support our interest in national defense and that was what we tasked uh the the audit with assessing the extent to which the existing estate did support that and the extent to which uh resources could be released to make the investments that we know are necessary particularly in our northern bases.
>> Thank thanks Minister. Before we um look, I just want to also just be clear in terms of the affected personnel on a sightby-sight basis. We have some data on a stateby-state basis. Could we please have on notice the number of affected personnel site by site?
>> Uh Senator, we can take on notice um the number of personnel currently serving at a site. And I make that distinction because our workforce is highly mobile uh and the posting cycle um will you know be in action throughout um this period but we can certainly take on notice um the categories of staff serving on listed sites.
>> Well all right look if if if it's any possibility of having that back today we would be most grateful uh because this obviously is very important to many many people. Look I just want to I've just got some other questions. I'll try and move through as quickly as I can. Were the service chiefs meaningfully consulted and their views given due weight in relation to the disposal of any particular site? And can I ask for if the minister will table the advice received from these senior officers if if that consultation took place in relation to the independent reviews recommendations?
>> Um I can describe again the process for the independent review. the independent auditors as I said earlier today.
>> No, sorry, Miss Perkins. Just I just want you to confine your answer to my question. And my question was, were the service chiefs meaningfully consulted and were their views given due weight in relation to this proposal? I think
Senator on the uh state audit public report it contains uh a forward that is signed by CDF the secretary and the three service chiefs.
>> Yeah, that wasn't my question. Minister Miss Perkins, can I just return to my question? Were the service chiefs meaningfully consulted and their views
>> Um the independent uh leads met with the service chiefs. Uh similarly detailed engagements um throughout the leadership of the services and other parts of defense occurred by the independent leads. As defense did its analysis um uh the service chiefs and the other group heads uh nominated their two star or banter representative to be part of that analysis. And in the work to return to government um we took defense's analysis through the relevant defense committees and as the um approach to government uh was developed uh the service chiefs and group heads were consulted as that advice was formed up and given back to
>> Right. Well, if we could have on notice that um copies of that correspondence please, including any advice that came back from the service chiefs or their representatives. I'd be grateful. Can I ask what screening checks will be in place to ensure, and this goes to my earlier concerns, particularly in relation to Swan Island, what screening checks will be in place to ensure potential buyers meet security arrangements?
>> Yeah. Um, so as I mentioned earlier today, um, in the work we've done today, Department of Finance will be responsible for that sale process. Um but at that site and others uh where we might have an adjacent uh activity with a security overlay uh there are mechanisms to include in the conditions of sales um uh issues we would seek to mitigate and we will have the level the lever of the foreign investment um review process to support us in that and we would fully intend to do that. I wouldn't mind just um uh coming back to
a point >> just on those mechanisms. Do you mind tableabling what those mechanisms are?
>> Well, as as I said
>> or is a mechanisms that have not yet
>> It it is it is normal in the um approach to market to include conditions of sale. Um the department of finance will be working that process um uh such that we can consider where a condition of sale might be important and um foreign investment might need to be scrutinized.
>> I've only got a couple of minutes left so I just want to quickly finish off my questions. What's the >> uh you need you can give me more time. >> I can give you ter rush. >> Well therefore in that case I'm going to promote the 2GB petition. Don't. It's 2JB.com. Petition don't sell Victoria Barracks. >> There's a lot of anger in Sydney in relation to the proposal >> to sell Victoria Barracks. More than 8,000 people have signed it already. So,
>> on your website, Hendo.
>> Uh, no, it's on 2GB's website. Thank
you.
>> Yeah, they're right. In 24 hours, more than 8,000 people have signed this petition. And so thank you for the opportunity to promote that chair. Michael McLaren is doing >> doing an incredible job running that petition. But there is a look let in there is seething anger in so many communities and and that what we can see with this petition alone is that more than 8,000 people have already signed it. But I just want to move to the time frame for the sites to be transferred to the department of finance. Is that uniform across every site? And when will that when will they be moved to the Department of Finance?
>> Senator, as I said earlier today in uh response to a question from Senator Cash, um we have an indicative goal from the government of being ready and prepared to go to market within two years. We will obviously focus on those vacant sites first. But as the deputy prime minister has said a number of times, he understands that some sites will be straightforward in the movement and the transition and some will be more um challenging and we will remain in close engagement with the government as the transition planning evolves. But the goal will be uh to support the department of finance on being ready to take these sites to the market within the next two years.
>> Okay. So do you have an indicative time this stage. >> So I I will put to you, do you have an indicative time frame for uh Fort Queens
>> Uh not at this stage. I would say though that is a site that has a very low population and um a much more straightforward transition plan.
>> Well, I am deeply concerned because I have been told the plan is to move that to to the Department of Finance by the 1st of July this year within a matter of months. Is that the case?
>> Uh, I haven't settled a date yet with the Department of Finance. As I've described before, we have a an arrangement, a memorandum of understanding in place. We'll be working with them as we firstly do the consultation I described earlier. Uh, it is my goal to start transferring sites to them this year. Uh, and we stepped through some of those earlier. Um, and and where a site can be prepared and transferred, it is the direction of government to me um to enable that. So,
is it the case that it is the plan to transfer the Fort Queens Cliff to the Department of Finance by the 1st of July this year?
>> I haven't got a specific date on that site. Um, but it will be a site that will transition in in in in I would I would imagine that site would occur
Well, uh I have been told on very good authority that the plan is to transfer that site within a number of months to the department of finance which I am clearly shocked about. Uh so are you putting to me that that's not the case or are you not able to answer that question?
>> I think the official answered your question. This is the third time you've asked it. And the first time you asked it, she said, "I have not made that decision." >> Uh, yeah. [clears throat] >> The official, Miss Perkins, as I have referred to her, the official has told you that she's not able, she has not yet made that decision. You are now asking a third time that Miss Perkins answer has
>> No, no, because information to me has been conveyed that there actually has been a date placed on this facility and that's why I'm interrogating
Well, nobody other than myself or Mr. West would be determining that date. So, Senator, I can't add to my answer.
>> Mr. West, do you know whether there's any plan to move Fort Queens to the Department of Finance by 1 July?
>> I can't add anything to Miss Perkins
>> Uh, when were the ex-service organizations notified about this sale?
Uh, Senator, we uh undertook a series of communications uh on Wednesday last week. Uh that included outreach to um um uh the RSL. Uh Mr. West held a briefing with Department of Veterans Affairs of um the peak veterans organizations on Friday and we have a series of additional consultations planned in the weeks
ahead. And look, could if we could have on notice the correspondence between the department and ex-service organizations, including the RSL. I mean, >> certainly. >> And that's horrifying within itself that they weren't consulted in the leadup to this announcement. >> Uh, and has the RSL conveyed to the department and the government the views that it's now expressed publicly?
Uh yes, we've seen their uh statement on uh the day of the government's announcement and subsequently uh um and have as I said engaged
>> U minister given the outrage which is already exploding across this country. uh would you be prepared to put the brakes on this sale and and meaningfully consult with organizations and impacted communities before proceeding any
>> Senator, I think the government's made its intentions clear. It's been through an extended serious deliberative policy process that has involved site visitations. It's involved involved consultation. It has then involved departmental analysis. Uh it has been we are very clear about our direction which is to ensure that the defense estate is fit for purpose and aligned with our strategic requirements and it's not at the moment and we intend to take the steps to remedy that.
>> And minister I will just reiterate what I said earlier. You said that we stymied some of these sales and I am very proud of the role that I played in stying the attempts by defense earlier to sell off for Queens Cliffe. I can tell you I am so proud of that. And you know to the current member for Corangomite, why is she not standing up against this sale? She's supporting the sale.
>> Has a question for me. It's not generally the case that we use this committee to make at home. I can tell
you this is a highly emotional and very controversial decision that your government has made. one of the worst minister since your government was elected >> and the question is why hasn't the member for Corangamite the current member stood up against this member for
corangite is a member of the senate and therefore I think her
member of this
estimates forum and an abuse of the
estimates no it is not an abuse of the
estimates indeed it is to make on other parliamentarians I am entitled to to raise serious
concerns when you have treated the
community with content. >> Thank you. We've got our social media. >> The community has been treated with
contempt. No, I've already got my social media. >> Yeah, I know. I'm sure >> I'm about to put up a different video.
>> I'm sure. I'm sure.
>> But now that you've prompted me, I might use this one as well.
>> No, not really. Anyway, um now I'm going to move the call along. Is there anyone else that has uh questions? You ask um you had any other questions? All right, >> we definitely have questions. I don't know. I mean, it just feels like all we're talking about is a state today. But anyway, >> we've got other questions if we can. >> Um, okay. Senator Whiteaker, I think, has some questions. So, we're going to move the court right around. Thank you.
>> Yep. Thank you very much, chair. Uh, I've got some questions. Uh, still relating to defense state. Apologies. Um, just relating to Tasmania. I know there's been some specific concerns about Tasmania. So, uh, I can see looking through the list that there's quite a number of sites in Tasmania, um, that will be impacted by this decision. I'm wondering if you could talk us through the work being done, um, specifically in Tasmania to ensure that ADF members, cadetses, and reserves will be supported through this process.
>> Thank you, Senator. Uh, uh, the same approach to our sites in Tasmania will be taken as to the description I provided earlier. So um uh those people have been invited into the initial consultations we've undertaken and we will be visiting Tasmania in the weeks ahead. Um while there are a number of sites listed in Tasmania, the occupancy of affected people is um uh relatively more modest. Um around 20 APS staff uh 294 reserves and 248 cadetses. Um the model of engagement will be the same as I described. Um uh alternate sites identified and work through a consultation and change process on transition. A number of the sites in Tasmania are vacant or extremely uh low occupancy. We'll work with those cadet units on alternate locations in community. One of the important solutions in the north of Tasmania for both reserves and cadetses is the planned multi-user depot in North Listen. Uh that has been a um arrangement with the Tasmanian government over a number of years that um we've now settled sort of the land acquisition pieces and we would hope um to uh commence construction this year and complete construction next year. That'll be a fantastic new multi-use facility. As I said earlier, for cadetses, uh we've mapped and are considering and we'll work with those groups on the appropriate or more appropriate community um uh facilities um that that are appropriate for them and that work will start in in the weeks ahead.
>> Um can you just confirm if Angles barracks is being retained?
>> Angles barracks is being retained. Yes.
>> And have am I correct in that there have been recent investments in that estate? Can you talk me through those?
>> Thank you. Uh, Senator, we completed um a $20.8 million upgrade at Anglec Barracks in 2025 and opened the McGee building named for Sergeant Lewis McGee uh Victoria Cross from World War I. It's a state-of-the-art facility that sits alongside the important heritage buildings at Anglesc Barracks. Uh has a number of my staff actually working in there. And we talked earlier about 1800 defense, our central defense um service delivery and customer support mechanism for all defense staff, ADF and APS. Uh they operate out of that facility.
>> Oh yeah, great. Um how will defense continue to ensure recruitment and retention through through Tasmania?
>> Um I'd refer to the comments um that General Fox made earlier about the recruitment model and and how recruiting is happening. Um but as I've said there'll be um Anglesy barracks as a prominent um central feature in Hibart. Um the new multi-user dep depot uh to be developed uh uh in the north of Tasmania and and a number of other solutions that we'll work through uh with reserves and cadets for their continued service.
>> Great. And just a final question um who in in the process of conducting uh the audit of the defense estate who um did the those leads engage with in Tasmania
during that process? >> Um so the independent leads in each of the states and territories engaged with with government officials. Um uh I we we reviewed those records. They did meet um with two government officials in Tasmania uh during the course of their work uh the state defense advocate and staff in in growth Tasmania.
>> Great. Okay, chair. That's it from me.
>> Thanks for that, Senate. That was lots very efficient of you. >> Thank you. >> Um Senator Shoebridge has been waiting. So Senator Shoebridge.
>> Um yeah, thanks chair. I was going to ask some questions about the Hunter Frigot project. Who's best place to >> I got a series of questions that relate to the ANAO report. Um the most recent major projects report. Um this project has four major risks identified by the ANAO. um and we'll probably go through them individually, but the first risk is um described as a risk that the design presented does not provide a sustainable design due to restrictions on margins, platform limitations, design uncert uncertainty and reference ship design intent resulting in a compromised capability and it talks about tracking arch naval architectural limits and design margins. This is the ongoing problem with the hunter, isn't it? That trying to pack so much onto it. Um, you're hitting weight restrictions, stability restrict restrictions, and at different times risks that it had overturn in a heavy sea. Um, how has this risk not been resolved to date? This project is what better part of a decade down. How haven't you fixed
that problem? uh shower alerts first assistant secretary major service combatants and combat systems. Um it is a risk and is a risk until we're actually able to physically measure the margins. Um we are monitoring the margins and at the moment we are still on track to meet the requirements of the mo of those margins but we have to keep the risk there. So we've mitigated, we've got it controlled, but we can't remove the risk until we actually do all of the physical measurements and that's when it gets alongside.
>> So and until you float it, you don't know whether it's going to capsize or
>> No, Senator, that's not what I said. I said we are meeting the margins of the moment in accordance with the design, but we cannot physically measure them and and actually remove the risk until we've done those final measurements. So we are tracking to meet the requirements
at the moment. >> Yeah. But what the ANAO says is you don't even have a sustainable design. It's it's it's questioning the existence even of a sustainable design. So you could meet the design, but what the ANAO says is that's not going to get you out of your hole.
>> No, that is not correct. That is not
>> does not provide a sustainable design. That's the wording from the ANO.
They may have said that but that is not what we agree with. We have a design that meets the requirements. We've specified the requirements that we need to meet per the design and we are tracking to meet those requirements for all of the margins at the moment. Now is
when you say tracking to meet the requirements is these the new lower requirements under a minim min minimal viable uh capability or is it the ex is it the previous contracted requirements with baa
>> it's it's a com it's the contracted
requirements. All right. Now, the ANAO report also says they're not going to be commenting on this after this, the the risk that the thing will capsize because they say from next year that risk is going to be transferred to Navy.
>> Uh that that we have a risk in the major projects report that we are tracking. uh Navy would also have their strategic risks that they are tracking.
>> No, but the auditor says please note this risk was transferred to Navy during financial year 2425 and will be removed from next year's major project reports. So even though the risk continues >> because it's sitting with Navy and not with Gazi, it's no longer going to be >> the subject of the audit report. What what you tell me what that means
>> that what that means is that risk has been transferred as a strategic risk to capability one the tool we use we are also in our specifications tracking against the design requirements in the mission system specifications that we have to meet so we are tracking that
>> all right but essentially um you'll keep building and whether it floats or not, whether it within naval architectural limits, whether it's a sustainable design, that's just now a problem for Navy when
>> No, that is not what I said, Senator. I said we have requirements that we are meeting that the design currently is meeting and I said that we will measure that and confirm and then we will remove the risk when we've done those measurements. The ship will not capsize. It is not they are not the margins we
are talking about. Mhm. It then says the second major risk it's caused by design delays and accumulated technical debt that the Hunterclass frigate design is not sufficiently mature to maintain continuous effic efficient production in quarter 2 2024. The result is schedule slippage and higher cost. Um that's playing out, isn't it? Schedule slippage and higher costs.
Um Senator we um have set the batch one schedule which is approved which was announced like June 24. So that is still the approved budget. The schedule the vessel acceptance date is still the same. What we are doing is looking at the technical debt. Um that is what we have left because maybe some information was not available and we've just done a major rescheduled production to ensure that we can still meet the vessel acception state.
Well, again though, the ANAO says, well, come the next report, they're washing their hands of it. They're transferring this risk to Navy.
>> There will be
>> There will be other risks that will be tracked in um our um risk tool called predict that will come up and be presented in the major projects report.
>> All right. Well then assuming it doesn't capsize and it presuming you can actually build it which is the first two risks. The third risk the ANAO point out is there's a risk caused by the evolving combat system design that combat system integration into the ship is not sufficiently mature. >> Senator >> now that means even if it doesn't capsize and even if you do produce it >> it won't be much chop in a conflict.
Senator, there are always risks and we obviously have to document those risks and make sure we mitigate and control those risks and that is exactly what we are doing here. So the risk there was um the combat system um obviously we're interfacing a new radar to a new combat management system. We are also interfacing um a cyber Australia developed Australian interface to that. we are conducting to mitigate that risk. We have conducted several tests over in the US where we are interfacing the CA radar with Eegis and with the Australian interface to reduce that risk. So that risk is reducing. It's still a risk until we've done the full integration.
>> Um Senator, it's uh David Hanley DeSc NSSG. I just want to foot stop on what Sher's saying here. None of these risks that you're mentioning here are any different to any other ship building program. We always manage strategic risks this way. Um the ones you talk about around margins, absolutely every ship program, AWD, OPV, they're all managed the same way. We've got to manage these carefully to closure. And your point about moving the risk to Navy, it's just an ownership thing. It's not where the management lies. The management lies with NSSG to deliver the capability to Navy. The ownership of the risk can change in due course. But the
neat benefit for defense is that these kind of embarrassing reports [snorts] highlighting all the risks will no longer appear in the major projects.
>> That doesn't mean they're not getting managed, Senator. That's the point I'm
making. >> In the dark with no public oversight.
>> No, that is not correct, Senator. There will be risks that we are managing that will be similar to those risks presented in the major projects report that we are managing at the tactical level to ensure we meet the specification. So, you don't
have a solution to integrating the combat system? >> Senator, >> let me finish my question. You you said you're working on a solution that there's some stuff happening in the United States, but you don't yet have a solution. And indeed what the major projects report says is that BAA BAE systems um is working on um refining systems and potentially having a solution but you don't have a
>> Senator again >> you wouldn't expect one. >> We design a combat system, we integrate a combat system, we test and validate the combat system. >> In every project we do that. We've done the same here. We have a design. Cheryl has mentioned that she's going through a process of integrating the combat system in the US with the unique systems the CA radar and eegis that is going well to plan and then we will test and validate that on board the ship with an independent crew >> to make sure that it is capable combat system
>> and then the ANAO said that even if the thing doesn't capsize you can build it and the combat system works They then say, "Well, actually, there isn't a plan to get a workforce to train and sustain it." [snorts] That's the that's their last risk. Now, that that may not lie with you. I accept that. But when the the National Audit Office is saying that even if you build these incredibly expensive, incredibly delayed um vessels and even if all these other things worked out, you don't have a plan to have a crew. CDF that doesn't have a warning bill to you. This is what the audit office is saying.
>> Senator Vice Mark, chief of the Navy. Um firstly your your characterization uh of these risks as being something that cannot be retired. I just want to put a little bit of context around there's a difference between a risk matrix which we establish for every single project and issues which is a realized risk and the the job of the delivery agency and the contractors is to burn down that risk profile during the build phase. So it is absolutely it's actually the department and the contractor who establishes that risk matrix which is then assessed by ANAO through the audit process and over time you see those risks burn down. That's the same for the combat system [clears throat] integration. It's the same for build margins and stability etc. So identifying a risk at the beginning of a project that there could be a stability issue focuses the designers on mitigating that risk and we overall we're actually pleased with the burndown of those risks since 2024. With respect to crewing plans there absolutely is a crewing plan. uh our recruiting strategy, our retention strategy is built around integration of crewing plans both for Hunter and Magami and the naval nuclearpowered submarine
Well, well, I hear that. >> Okay. >> The difficulty you have is that the ANAO identifies these not just as um emergent risks, not just as issues. They have a choice of language here and they choose major risks because each of them of course are a risk to the project.
>> They haven't been characterized as issues. They are major risks and they are they attract an appropriate level of oversight, scrutiny and ongoing focus
>> That oversight from the ANAO is going to be removed because and again I'm going to quote from the ANAO report. >> All capability related risks have been transferred to the Navy sponsor for management. Um that's what they [snorts] say and they say that they are being removed from next year's major project reports. So >> these major risks rather instead of having more scrutiny are having significantly less scrutiny because you're taking the ANAO out of the the equation.
>> We haven't removed the ANAO from the
equation. >> Self removed like a selfsourcing audit removal.
>> They're able to audit at any time. I'll just throw back to uh to >> Cheryl the call around
it won't it won't stop [snorts] the scrutiny that occurs on those risks at a tactical level >> through Cheryl's team in managing the risk through BAE and delivering the capability it's just a change of ownership will have the same visibility of the risk and the burndown plan
>> and hang on Senator just hang
>> there are equivalent risks there will be similar risks um to the first three that you mentioned that will be measured tactically and the ANO will still ANAO will still have visibility to those
risks >> and and now with the Hunter Frigot project which is just eye wateringly expensive and incredibly slow because it's having all of these highlevel boutique weapons platforms and combat systems and designs. That's why it's so incredibly slow and incredibly and incredibly expensive. But now even though that's what's causing all the costs now the key risks are going to be transferred to Navy and all of this exquisite whisbang only for Australia you know um capabilities they're not even going to be assessed for the bulk of this project because it's now being assessed against minimum viable capability which is which is maybe fine going forward. But making that switch midway through with the hunter means we spend the money, incredible amounts of money. We have incredible delay and then at the end of the day, we're going to get something tested against a system that's no better than an off-the-shelf product with minimum viable capability. It's the worst of all worlds for the Hunter,
>> Is there a question there, Senator?
>> Yes. the change to minimum vi viable capability, which is what Navy will be assessing against because they've been told to under the um integrated investment program, happening midway through the Hunter Frigot project is going to mean vast amounts of lost money and vast amounts of lost time because the design and the expenses for these exquisite programs, but you're going to be attesting it against a much lower standard. >> All right.
assessed against the contract
>> Yes, Senator. And >> it it belies the fact that the way we deliver projects is Cheryl's team manages it with the contractor. They manage all the risks through to the point at which it gets handed over to Navy for operational test. That does not change the manner or the way in which we manage the tactical or strategic risks
been handed to Navy well before
operation that you've done. now expired. I'm going to move the call around to Senator Collins. You have the call.
>> Thank you so much, Chair. Um, uh, Chief of Defense Force, uh, you've confirmed that a PL, uh, amphibious task group operated in the Southwest Pacific late last year. Uh, you also confirmed that it stayed, and I quote, more than 200 nautical miles from Australian territory. Uh, can you just clarify the closest confirmed point of approach for us, including whether that 200 nautical miles refers to the Australian EEZ
Senator, yes, that's a correct characterization of the evidence I gave in my opening statement. The 200 miles was from our territorial baseline. The units we were shadowing them with our own vessels at the time. They remain a number. I think they passed probably within five or seven miles outside of the 200 mile mark. So were just clear of it. But we had very strong surveillance over those platforms while they were approximate to our w our near waters.
when given uh the satellite tracking I believe uh dropped off around the equator. Uh when were you aware uh when did defense first become aware that the flotillaa had moved that far south um uh into the wider southwest Pacific?
>> Senator, I can't answer that question with precision because it would give a very clear indication of our capability. What I can say with the combination of information available to us, we had a good understanding of the the daily locations or so of those vessels that was working with partners. We had our own aircraft deployed uh into the western Pacific. Uh but a combination of means that enabled us to have an understanding of what the task group's movements were.
>> Thank you. And uh did this flotillaa uh go down the whole side of the Queensland South New South Wales coast or was it just a one?
>> No, it it closest proximity to us was through the northeastern part of the Queensland coast. Uh it moved through a number of the Pacific Islands uh and then turned north just outside of our 200 mile zone.
Uh, which Pacific Islands did it go by,
>> It it went past a number of them. And when I'd say that, not necessarily within their territorial seas, uh, but through and near Numea, uh, up through the the Northern Islands, then back up through near Papa New Guinea.
>> Did it stop at any ports along the way? And were the other Pacific Islands aware of the flotillaa passing through?
>> So we worked with a number of our near neighbors based on both what information they were seeing and contributing our own understanding of it. It was a very collaborative approach. There was strong interest uh from our Pacific partners on uh what the task group was doing and what what movements it was do what it was doing while it was conducting its deployment. So the collaboration between our partners was very strong.
>> Uh did it conduct any live fire exercises while it was out here?
>> Uh
for that period where we had ships in direct surveillance which is when we would observe it directly. No, it
didn't. >> Okay. Thank you. Are you aware of whether it was doing any research why the flotilla was coming down? >> What's your analysis of that?
>> No, we of course that's a question for the Chinese government to answer for the purpose as we have characterized in previous deployments of this nature. Our assessment would be it's a reflection of the growing capacity that the Chinese military and particularly its navy has. It's a demonstration of its ability to operate much further from China's shores than uh it has routinely done. It unquestionably is demonstrating into our region uh that the Chinese Navy is capable of deploying. uh it would be doing training gaining familiarity of operating at a greater distance uh from China. So uh we judged the nature of its activities was both for internal training purposes as well as signaling to our to Australia in our region the capacity that the Chinese military has.
>> Thank you. Uh did it interact did the flotilla interact at all with any of our ships or aircraft or any partner forces
>> when you mean interact senator?
>> Well was there any sort of radio contact any communication?
None that I am aware of. But I but we had aircraft surveilling it that we may have had messages from the ships just uh asking us to remain clear or not interfere with their activities which would be routinely the case but no non-rine communications that I that I am
aware of. >> Thank you. >> Okay. If I may now just switch to a different uh topic. Uh, Secretary Moriati, in the last estimates, um, I thought it was, um, worth bringing attention to a comment that you made, and it is on the Hansard record, and it is, I quote, I don't believe that Russia would have been able to conduct the types of operations and replenish and grow capability to the extent that it has, if it wasn't for Chinese cooperation and in some ways, the provision of material assistance. A number of these things are having a really unfortunate impact on the European theater, but they also contribute to a security deterior deterioration in our region. So in this context, I was just interested. Australia has just given $95 million uh in a Ukrainian aid package. Um and that's against $115 billion in imports from China and $196 billion in exports of raw materials. So do you think that there is a concern at a strategic level uh that we might be providing assistance to the Ukrainians on one hand but fueling the opposing war
on the other? Uh Senator, I certainly think that the the um the support that China has provided Russia has prolonged and uh worsened the conflict in Ukraine. So I I I don't believe that Russia would have been able to prosecute that conflict in in the way it has without Chinese support. And I think that that's government's made it very clear and the foreign minister, deputy prime minister, I think the prime minister's spoken about this as well that we we have called on China to exercise the influence that it has to um to to encourage uh Russia to to um well first of all cease and and desist but to to come to a uh to a peaceful settlement. I think that there's a risk as well about technology transfer between uh Russia and China that we are closely uh you know monitoring and and concerned about and I'm also very worried about the presence of North Korean troops in the in the Ukraine uh area of operations that I believe that the the combat experience that the North Korean troops uh obtaining in that theater, they will bring back those that survived, they will bring back to North Korea and that will heighten the risk to our partners and and and friends, the South Koreans. So, there's there's a number of those connections between what what is happening in this theater and the Ukraine conflict that I think have a negative impact on Australia's security circumstances.
>> Okay. So can can I just confirm you said that the defense minister has been raising this with his Chinese counterparts?
>> No no no the the the well certainly um the the deputy prime minister has raised this but he's he's also me mentioned
[cough] it publicly. >> Okay. Has it been raised with the minister by any of our security allies in bilaterals
Well,
>> Senator Deputy Secretary uh strategy policy industry. Yes. Uh look, the the issue of uh Ukraine and the defense of Ukraine remains an issue for discussion among our partners and allies. Uh indeed um we contribute the government has contributed in excess of 1.7 billion uh in Australian dollars to the defense of Ukraine and that defense is delivered through a number of means including through our allies and partners and the work that NATO is doing. And so uh we for that reason it's always an issue of conversation and when the deputy prime minister was in um the HG last year for the NATO summit uh uh this was of course something uh he raised and was raised with him by all interlocators.
>> Okay. Um has any consideration been given to providing more assistance including uh more material to Ukraine?
Senator, we keep everything under review in terms of how we can usefully contribute to the defense of Ukraine um to support the government's objectives of ensuring that this war can be brought to an end in in in a manner and on terms uh acceptable to Ukraine. Uh the uh the the support that we provide is broken down essentially into four main ways. It's direct material assistance from ADF stocks. It's financial contributions through through uh NATO other mechanisms. It's uh training assistance and working with the Ukrainian armed forces on training and it's the provision of um ADF capability including for example um early learning aircraft to contribute to um the ability to uh for our European partners to better understand their uh and to support their work around um ensuring the security of of their uh aviation domain. And this is important in particular in terms of ensuring that uh even though we're a long way from Ukraine geographically, we we continue to I think have a vital interest in how that war is resolved.
>> Thank you. Has there been any request from the Ukrainian government for more assistance in the past 6 months, particularly material assistance?
>> Uh I would dis would characterize that as a discussion. We we're always engaging with them on how we can best support. Um we have um Australian diplomatic personnel uh working in Ukraine. We work through as I said our other partners and it's always a question of how we can best contribute in a way that's going to mean meaningfully make a difference.
>> Okay. So do you have any examples of things that they've been asking for?
>> Vernon Phillip, our first assistant secretary international policy. Uh Senator, we as Mr. Jeffrey says are in regular contact with the government of Ukraine directly and through other mechanisms such as the Ukraine defense contact group where they will set out their requirements. Uh most recently in addition to the uh gifting of items that we provided to Ukraine. We the government announced a contribution to the prioritized Ukraine requirements list or pearl. Um and that is what it says essentially a list of the highest priority items that Ukraine needs. uh to prosecute its objectives and our contribution will uh directly uh enable the provision of that capability.
>> Okay. Because we have I mean there's an awful lot of capability here in Australia, you know, with a a you know pretty terrific defense industry I think. So are we taking advantage of that? Are we trying to get more materials over to Ukraine? I'm just I'm not really getting a sense of the exact things that you know have been requested uh and how much of that has actually been fulfilled for the Ukrainian
>> Officials can talk you through what has been delivered. There's been a consistent um and substantial effort made by governments uh actually of both political persuasions to in support of
>> Yeah. Yeah, I'm just wondering re recently in the past 6 months you know
>> we're constantly evaluating options for the provision of capability. I mean a decision then has to be made by government and defense needs to provide advice to government in the first instance in terms of uh the cost of providing that capability including transport uh whether there are any third-party issues um if um say it's equipment that we've sourced from the United States and also what the impact would be on ADF capability and weapon stocks. So we're constantly assessing um uh these issues. We're in the process of doing so uh at the moment. um in relation to a range of capabilities and we regularly um at multiple levels um are participating uh in NATO and other multilateral meetings uh where Ukraine is putting its requirements uh on on the table. So it's a it's a continuous process and that's um how we've uh the governments have made decisions um over the past four years to provide assistance valued defense assistance valued at over $ 1.5 billion.
>> Okay. You asked about recent contributions, Senator. So, in December, uh, the deputy prime minister and Minister for Defense Industry announced a $95 million package of military aid for Ukraine. Uh, at the same time, the government announced sanctions on a further 45 vessels linked to Russia's shadow fleet. That brings the total sanctioned fleet to 200. Uh, and in January, the foreign minister announced a $10 million contribution to the Ukraine energy support fund in response to Russian strikes on critical
>> Okay. Thank you. I'm actually um uh minister more interested in the uh technology and equipment that has been requested that hasn't been fulfilled and uh wondering you know you know we have uh if you look at the Ukraine war things like drones are having a huge role to play in that. uh and I'm wondering whether uh you the Ukrainian government is requesting technology equipment like that and whether we are able to fulfill
>> Senator, one comment I could offer is that um Ukraine now has a very well-developed um and capable domestic um defense industry including drone production. uh so they are often looking for partnership uh by foreign countries rather than just gifting of capability and again that's an area where we are in um regular discussions uh with Ukraine both bilaterally but also our membership of what's called the drone capability um coalition.
>> Okay. And and what about coal? I mean I believe that uh we were interested in providing energy security to them. I know that they're still uh being attacked uh on their energy supply. Are we interested in providing any more coal
>> Look, I'd refer you to other agencies uh there, Senator, but certainly, as you say, the attacks on Ukrainian energy infrastructure are amongst the most serious we've seen in the war and are
>> Couple more questions. I can go through
>> We'll go to break. All right.
The the Australian Ukrainian Federation of Organizations has argued that up to $3.8 billion dollars of Russian crude oil imports made their way into Australia, subverting action uh sanctions regime. So, I'm just interested in what steps defense has taken to deal with sanctioned oil in our supply chain, including the defense supply chain, and whether Minister Miles has taken an interest uh in the issue of Iranian and Russian um ghost uh fleets.
Uh well, Senator, um Defense's strategic fuel supply partner, Viva Energy Australia, has confirmed that it complies with all applicable sanctions um imposed by the Australian government and does not purchase crude oil or refined petroleum products which have been extracted or manufactured refined in Russia. Um we understand that Viva Energy Australia has no imports scheduled um in its um forward program um uh that that um would address the question that you um have have raised. Uh colleagues might wish to add to that detail. Um finally I would say that um officials are led by other agencies are evaluating options in terms of how we might put further pressure on Russia's
Senator Lieutenant on capabilities. Just in addition to my colleague, I would say that uh the mechanisms to track and monitor all energy products via third countries are not in place in those countries. Uh defense is working with the department of foreign affairs of trade and other departments that ensure that we can evaluate options to place further pressure on things like Russia's oil
>> Okay. So, so, uh, we are cuz I'm I'm just going to clarify here because my understanding from from your evidence was that we didn't have that in our supply chains, but your evidence uh is that uh we just don't know whether we do or not because we can't monitor it from other countries. Is that correct?
>> Uh, so Senator, our strategic fuel supply partner is Viva Energy Australia. So, we work with Viva Energy. Um they've confirmed that it complies with all applicable sanctions imposed by the Australian government regarding that purchase of Russian origin products and accordingly does not purchase crude oil or refined petroleum products which have been extracted or manufactured in Russia. I mean where they purchase it from beyond that I mean the mechanisms in place are as far as we know and they're making every action possible in accordance with the government direction to not purchase Russian sanctioned crude
Okay, thank you. Is there any coordination across the government on this particular issue? You
>> Yes, we uh we regularly um discuss um all aspects of how we can support Ukraine um both in terms of uh ending the war on its terms and imposing costs on Russia uh with other agencies through an interate departmental committee
>> Okay. Thank you. Final question. And I'm just wondering whether defense has conducted any analysis of how our trade relationships uh align or conflict with our strategic objectives. Is there any analysis done
>> Senator, we you know obviously the the Department of Foreign Affairs and Trade will be the department in the government that will look um strategically at our global trading position. Uh we've talked this morning about the fact that part of a more contested strategic environment is that uh global trade is becoming more contested uh more subject to um intervention. Um and where we need to think uh harder about the need to address um questions around supply chain vulnerabilities in relation to key capabilities. And obviously um uh we want to ensure that Australian exporters can export across the world and that Australian consumers can access the cheap you know the best and cheapest goods from anywhere in the world. But in some [clears throat] areas such as defense capability, we want to be uh we want to be sure that we're minimizing the exposure of that supply chain to um disruption particularly in event of a crisis or through a form of coercive leverage. So we do think hard about our supply chain. We do think hard about how who we partner with when it comes to defense industry uh internationally and what treaties and agreements that we need to ensure that we can build a uh a more a bigger uh more flexible more integrated industrial um defense industrial base with our partners. Um but obviously um that's just the area that defense is responsible for but it is a part of how we think about our approach to to global trade. Ju just
just on your point there that you know the the international aspect of it when defense is deployed overseas how do you maintain oversight of you know the supply chains of um of oil so if you're if you're buying through partners if you're overseas do you have those sort of risk analysis
>> I'm I'm looking at Susan there
>> yeah certainly uh senator I'd just uh if I could talk to one of the divisions inside my group is called national support division and one of the roles that they're doing at the moment is they're developing and using it's a defense supply chain analytics and resilience capability and they're using this capability uh to map relationships between our defense inventory catalog and also open source data to identify any potential risk to either defense platforms or our capabilities. It's work in progress. Um and that supply chain analytics capability has the ability to identify risks through the multi-ter for our defense supply chain by connecting our defense suppliers to potential risks and also by uh helping them have that relationship to understand any potential threat vectors um as such as foreign ownership, trade restrictions, sanctions and critical minerals. So there's some good work happening with inside the department.
>> Excellent. Thank you. Um chair, I just wanted to ask a clarification on the evidence that was just given. And it's going to be very quick. Um if so that you your evidence is that foreign affairs uh would foreign affairs and trade would give you advice on the supply chains and the trade relationships. Is that right?
>> Uh no, it was more uh senator that um discussions will be held between agencies about what options there are to put further pressure on Russia. And so that's one of the issues we're looking at at the moment in relation to how um Australia could contribute to broader efforts to put pressure on um Russia's oil revenue.
>> Okay. Thank you so much. Thank you,
>> No worries. Okay. Well, we're going to have a little break and we'll be back here in about 10 minutes. Thank you, mate. All right, Senator Shoebridge, I'm going to give you the