Taxpayers foot bill for $5b French company to fight our own government

The Defence Department is stumping up the legal fees in an FOI fight over how much the disastrous submarine contract is really worth.

Senator Rex Patrick (Image: AAP/Lukas Coch)

Since when are Australian taxpayers expected to pay for a government contractor’s own cover-up? That’s what’s happening in a legal battle between independent Senator Rex Patrick and the company behind the government’s disastrous $90 billion contract to build Australia’s new submarine fleet, Naval Group.

Defence revealed last week that it was paying Naval Group’s legal fees in a fight over how much the contract is actually worth.

This means the government has paid a multinational company, with an annual turnover of more than $5 billion, to hire lawyers to prevent information being released … under the government’s own freedom of information (FOI) rules.

How did this happen?

The long-running subs saga has been besieged by questions about the true cost of the project, which began life as a “$20 billion” deal under Tony Abbott and blew out to a “$90 billion” contract under Malcolm Turnbull.

Patrick has been trying to use Australia’s FOI laws to get access to the true cost of the project since 2018.

So far the government and French-owned Naval Group have managed to block his attempts, with a hearing now before the Administrative Appeals Tribunal (AAT) to decide whether the information should finally be released.

But in a response to questions on notice from Senate estimates, tabled last week, the Defence Department admitted it was funding Naval Group’s legal expenses to be a party at the AAT proceedings, something Patrick says is an extraordinary misuse of government funds.

“It is outrageous that the Department of Defence would fund the legal bills of a $5.1 billion foreign company in circumstances where they are trying to prevent the Australian public from getting access to information,” he told Crikey.

“This is an appeal from a decision by Australia’s specialist FOI expert — the information commissioner — who granted me access after two years of consideration.”

The senator has written to the company demanding it pay its own legal costs.

Secrecy the winner

The sub deal has been mishandled from the beginning. But this latest chapter exposes just how far the government is willing to go to protect the secrecy of government-funded projects — even in the face of Australia’s FOI regime.

It also raises questions about how common the practice is for a government department to agree to be liable for a private company’s legal fees in the event of an FOI request.

There are clear reasons as to why the government would want to pay for Naval Group’s legal fees — by protecting the contractor’s secrecy it is able to disguise exactly how much money has been wasted on the project and thwart further questions about why Australia needs to spend so much money on outdated submarines.

But as one of the biggest contracts in government history, taxpayers will be asking questions about whether this takes secrecy to a new extreme, and denies them a basic right to know what a government contract costs.