Clarity lacking on $6.6m Huawei call

THERE’S nothing new in governments blowing lots of taxpayers’ money on contracts that fall apart for one reason or another.

For example, former prime minister Scott Morrison’s recent French submarine folly has cost the new federal government $835 million in compensation.

Closer to home, Transport Minister Rita Saffioti sheepishly rose in state parliament on June 14 to reveal a broken rail network communications deal with controversial Chinese telco Huawei had cost taxpayers $6.6 million in a termination settlement.

I used the word ‘sheepishly’ as the minister and Premier Mark McGowan had been batting away obvious concerns about the $205 million Huawei deal for the past three years because they thought they knew better.

But now Ms Saffioti has eaten some humble pie, it’s worth looking at the wording she chose in parliament to finally tell the public their money had been wasted.

“After significant negotiation, both parties agreed that Huawei could not fulfil its contractual obligations and the contract was terminated in September 2020,” Ms Saffioti said.

“The Public Transport Authority has recently reached a termination settlement of $6.6 million.”

Firstly, if Huawei couldn’t hold up its end of the bargain, then why are West Australian taxpayers on the hook for millions?

Secondly, how recently was this payout to Huawei made?

In her statement to parliament, Ms Saffioti offered no explanation of why we should be paying Huawei.

She blamed the deal’s collapse on a “trade dispute” between China and the US and said that “severe restrictions on Huawei ultimately resulted in Huawei being unable to deliver the project”.

Again, the WA government did nothing wrong, according to the minister.

By the way, there was much more to Huawei’s issues in the US than a simple trade dispute, and Ms Saffioti knew it.

In 2018, at the same time the McGowan government was defending its contract with Huawei, the company’s deputy chair was arrested in Canada on behalf of the US Department of Justice and charged with a form of money laundering linked to harsh anti-terrorism sanctions against Iran.

And don’t forget that the Australian government had banned Huawei earlier that year from having any involvement in the rollout of our 5G network.

In 2012, the Australian Security Intelligence Organisation recommended Huawei play no part in the National Broadband Network.

The red flags were everywhere, but the state government pushed on, saying it had its own advice from the spooks and there was nothing to be paranoid about.

Any questions about the Huawei contract were met with derision.

“This opposition, the Liberal Party in Western Australia, is now engaging in an anti-China jihad,” Mr McGowan said during a 2019 debate in parliament.

“It is potentially very damaging to this state.”

It was the contract that turned out to be damaging to WA because Huawei was on the nose in just about every country Australia called an ally.

The yet-to-be-justified $6.6 million settlement was only the beginning of the financial pain.

The new radio network contract for Metronet trains, signed with Nokia Solutions, is worth $327 million (a $122 million increase).

That figure and the termination payout to Huawei mentioned above were made public for the first time on June 14.

But under further questioning during an upper house budget estimates hearing last week, the McGowan government revealed it had signed the more expensive Nokia contract at the end of last year and chose to keep it quiet for six months.

Representing Ms Saffioti in the estimates hearing was Education Minister Sue Ellery.

“Advice at the time suggested we be able to both update the public on the delivery of the project and the finalisation of the termination of the Huawei arrangements at the same time, giving a complete picture of the project,” Ms Ellery said.

To sum it up, the Huawei deal was in trouble from the start, and a government that once talked a lot about gold-standard transparency should have come clean about the waste of money much sooner.