Minister for Defence - Speech to the Submarine Institute of Australia

Distinguished guests, Ambassador of France to Australia Christophe Lecourtier, Chief of Navy Vice Admiral Tim Barrett, Submarine Institute of Australia president Mr Andy Keough.

Ladies and gentlemen,  I would also like to acknowledge the traditional owners of the land on which we meet, the Kaurna people, both past and present and to acknowledge their stewardship of this extraordinary continent of Australia.

Let me acknowledge my State Parliamentary Colleagues Steven Marshall, Leader of the Opposition and I was hoping Senator David Fawcett would be here so hopefully he is here as well.

Mr Ambassador let me say I hope you will accept my very sincere sympathies in relation to the most tragic and horrendous events that your nation’s capital has been through over the last few days.

We are thinking of you and we are with you in prayer and in spirit

Thank you for the opportunity to address to this important conference.

The Submarine Institute of Australia is a specialist community of experts who know the business of warfare, the business of submarines, and the importance of maintaining the ability to deliver strategic power where and when it is needed.

So I have two key messages for your association, especially for those of you who are now working on the industry submissions that are to be considered within the context of the competitive evaluation of proposals for the next generation submarine.

First, for the Turnbull Government, the submarine will remain a core strategic capability.  We do not see the submarine as an option, but as a necessity. We will ensure that this necessity is delivered in the most effective and the most cost efficient way possible.  And to do that, the Turnbull Government welcomes consultation with as wide a variety of relevant groups as possible, particularly specialist associations such as yours.

Second, national defence in the 21st century is increasingly a national enterprise, not just the responsibility of the Defence organisation.

To this end, it is important that you appreciate that the Turnbull Government, consistent with the PM’s emphasis on cooperation and collegiality within the Executive, will deliver the major strategic capabilities on the basis of whole-of-government consideration and whole-of-government decisions.

That means that I will be working in close collaboration with my colleagues Simon Birmingham, the Education Minister, and Christopher Pyne, the Industry, Innovation and Science Minister - and both of them key South Australian Ministers - to deliver the next generation submarine and the future frigate as part of the national Defence enterprise.

As a national enterprise, Defence needs to leverage the educational and industry investments made across Australia as a whole.  The sectoral dependencies of the past are no longer workable or appropriate.  What we need is flexibility, agility  and innovation in delivering the capabilities that both deter and win in the 21st century.

The Government has already taken the first steps to provide industry with more certainty by announcing the implementation of a continuous build of surface warships in Australia, centred on the construction of the Future Frigates in Adelaide.

The continuous build strategy will bring to an end to the boom-bust cycle of Australia’s naval ship building industry.

As part of delivering and sustaining our new naval capability, the Government is fundamentally reforming the way Australia acquires its naval vessels.

This will commence with our new Offshore Patrol Vessels, which will have expanded range and enhanced sea handling and sensor capabilities, and our Future Frigates, which will be required to conduct a range of missions, including anti-submarine warfare.

Modernising our future naval capability will be critical to creating the more agile and potent force that Australia will require in the coming decades.

Military modernisation in our region over the next 20 years, including the increasing prevalence of modern submarines and anti-submarine warfare capabilities, will raise the bar for Australia’s defence capability requirements.

We will need a regionally superior submarine with the range and endurance of the Collins Class submarine while possessing the highest quality stealth, intelligence and maritime strike capabilities.

We also need a submarine that also has very high levels of interoperability with United States capabilities.

We must also maximise the overall effects our forces can achieve through the ability to integrate and effectively share information between capabilities within the ADF as well as with allied capabilities and systems.

In this context, we must maintain a clear focus on how our submarines will contribute more broadly to our long-term defence capability.

Our Future Submarine Program will be one of the most complex and expensive projects Australia has undertaken in the Defence portfolio.

So it is vital that we develop a comprehensive understanding of the many interdependent elements of the project that will be required to come together to deliver the capability.

We will also need to comprehensively address the scheduling and costing of the set of decisions we must take.

We will need world class complex project management skills and expertise to ensure that the Future Submarine is achievable, affordable and deliverable.

That is why the Government is taking a very careful and methodical approach to decisions surrounding the Future Submarine’s acquisition.

This conference will make a valuable contribution to these considerations.

I am pleased to see a number of senior ADF and Defence Officials are able to participate in the proceedings here this week. I acknowledge them and thank them for their work.

Submarines are a vital element of Australia’s defence strategy today, and will be so into the second half of this century.

The focus of public discussion and debate about Australia’s Future Submarine often overshadows the fact that Australia has a potent and agile submarine capability today in our Collins Class submarines.

Acknowledging the challenges of the past, we should also recognise our successes in recent years and the improvement in availability across the Collins fleet. I have been discussing this with the Chief of Navy this morning.

Indeed, our current submarines have a significant role in ensuring Australia’s maritime security and sovereignty.

I am very grateful to our submariners and our submarine community for their contribution to Australia’s defence and national security.  I acknowledge the unique and dangerous nature of the work our submariners undertake for our nation.

Last month I was in the United States for the annual Australia-United States Ministerial consultations. My American colleagues made clear to me their appreciation of the capabilities of our submarines and the very high level of cooperation and interoperability we enjoy.

The forthcoming Defence White Paper will provide the context for our decisions on the future submarine and many of our other major works.

Our defence capability plans will be affordable, achievable and sustainable, backed up by Australia’s first fully costed, and externally cost-assured, Defence White Paper.

The White Paper will set out the Government’s strategy to defend Australia and its national interests.

To meet our future challenges, the Government will deliver an Australian Defence Force with the highest levels of military capability and technological sophistication.

We will ensure that Australia has a more powerful and agile set of military and enabling capabilities to seize the opportunities in our region and meet a more uncertain regional and global security environment.

The White Paper will outline our long-term capability requirements.  Which will of course include the number of future submarines Australia will acquire.

And because it is the Government’s strategy, I, along with Prime Minister Turnbull and the other members of the National Security Committee of Cabinet, am taking the time to ensure that it is the right strategy for a modern Australia in a complex world, and a strategy that the Turnbull Government is committed to and ‘owns’.  This will rightly take some time, and for this reason, we won’t be releasing the White Paper until early 2016.

The White Paper will be accompanied by an Integrated Investment Programme, which for the first time will bring together all Defence capability-related investments – in major equipment, infrastructure, Information and Communication Technology and personnel – over the next decade.

We will also release a new Defence Industry Policy Statement, which will re-set and refocus the partnership between Defence and industry to deliver and support the defence capability plans in the White Paper.

The new Defence Industry Policy will offer industry greater opportunities to build its innovation, its productivity and its international competitiveness in the provision of goods and services to Defence.

Delivering the high technology future force will depend on our capacity to partner with industry; and it will take innovation.

The Government is committed to giving better support to industry and the research community to promote innovation and translate innovative ideas into practical capabilities.

Our commitment to improving the way we engage with industry is one of the key recommendations of the First Principles Review, which was commissioned by this Government in 2014 and released in March 2015.

One of the key findings of the Review was that the outputs of Defence industry should be viewed as a Fundamental Input to Capability.

I am a very strong proponent of this and intend to seek out opportunities to drive this in all of our key investment decisions and help create an environment where our people welcome industry collaboration, where it is appropriate.

I will seek to involve industry earlier and as more of a partnership.  I will seek to foster innovative and agile approaches to complex problems that constantly challenge our Defence Force.

Government does not have all the answers – being a so-called ‘smart buyer’ means more than just outsourcing our procurement functions – it means engaging industry in a way that fosters solutions, reduces risk, and ultimately drives value for money to achieve the best possible capability for our Defence Force.

I am very much committed to the implementation of the Review’s recommendations and will continue to push Defence every day as we seek the best outcomes.  Indeed, just last week, the Senate passed a Bill that, if it is passed by the House of Representatives, and if any one of you can count it has solid success there, will see an historic change to the constitution of the Defence Force and will truly set the scene for ‘One Defence’.

The Government has a clear strategy for achieving a productive, cost-competitive and sustainable naval shipbuilding industry.

We also know that Australia cannot afford a naval shipbuilding industry at any price.  A reshaping and reform of the naval shipbuilding industry will be needed if we are to deliver the future Navy we need, at a price we can afford.

If we are to ensure that the ADF is a balanced force, with the highest levels of capability and protection we can afford, we must deliver capability that is value for money and internationally cost-competitive.

Substantial reform of the industry will be necessary and hard decisions will need to be made. The Government is willing to make that commitment. We will require industry to do the same.

We expect industry to work with us to reform the naval shipbuilding sector. We expect industry to make the necessary investments, provide the necessary skill base and build innovative new construction practices to deliver highly capable, cost-competitive naval vessels.

At the heart of this will be a commitment from industry for a productivity-based culture, which includes management, the Unions, the workers, with supportive government.

Industry will need to build complex project management skills in senior management and across the workforce. It will need to build experience in its workforce and sub-contractors, it will need to be focused on quality management and delivering the right product at the right price on time the first time.

As you’ll also be aware, submissions for the Competitive Evaluation Process to find an international partner for the Future Submarine Program are due to be received at the end of this month.

The Government understands the great significance of the decision-making process that will occur once these submissions are received and of the decision itself for Australia’s future.

We are determined to get the best capability and the best value for money through the Competitive Evaluation process for the Future Submarine.

There have been some criticisms of the Competitive Evaluation Process that have suggested that the timeframe for the process is not adequate to fully analyse the substantial range of issues that must be considered in proceeding with the submarine’s development.

I would note that all three participants, DCNS of France, TKMS of Germany and the Government of Japan have stated that they are satisfied with the timeframes that we have given them for the Competitive Evaluation Process.  Some may say ‘of course they’d say that’ – perhaps they would – but we know that all three participants have invested in developing their responses to meet the schedule and that all three have done everything they can to demonstrate their suitability to be our partner.

When it comes to considering the proposals and making the decision, let me assure you that the Government does not intend to be rushed. This is too important a decision for that.  We will take the time required to consider all options and to allow a comprehensive assessment against all of the Government’s criteria to be made.

There is a risk in moving too quickly, clearly, but there is also risk and potential cost, in adding more time to this process.

The Government has considered all the risks inherent in the development activities, and taken the best possible advice from the Department of Defence, and we have chosen this process as the most appropriate means to manage those risks given the nature of the process and the need for this critical capability.

This process provides a way for Australian industry to have the greatest possible involvement in the program, without any compromised cost, capability, schedule or risk.

In addition, the Expert Advisory Panel appointed by Government continues to oversee the conduct of the Competitive Evaluation Process to ensure the fairness and equity of that process.

The aim of the CEP is to inform Government’s decision on the international partner to work with Australia to develop and deliver the Future Submarine.

We have sought and are expecting proposals from all three participants to include proposals for onshore, offshore, and hybrid build options.

Through this process we will assess the ability of participants to work closely with us, including how each would approach our capability and sustainment needs, and how cost and schedule would be managed throughout the program.

For a program of this nature, we need to work closely with the selected international partner to fully develop the Future Submarine. This is going to be very resource-intensive for both Defence and the selected international partner.

Once the partner is selected, there will be about three years of further development work before we finalise the Future Submarine’s capability and cost.

Indeed, lessons from the Collins Class submarine program and other international submarine acquisition programs clearly indicate the need for such collaboration to arrive at the best understanding of capability, cost and schedule.

We need to commence this intensive work without further delay to avoid a submarine capability gap in the future.

As it stands, avoiding a capability gap will require us manage the life of the Collins Class submarines beyond their planned withdrawal. We’ll need to continue to invest in the current fleet for years to come.  It’s important we don’t lose sight of this – the Collins Class submarine will continue to be a potent capability for the ADF for years to come.

I’m looking forward to the comprehensive consideration of the CEP, and being able to announce our decision on the international partner for Australia’s future submarine next year.

Regardless of that decision, we need the sovereign ability to maintain that future submarine over many decades. And this will generate significant opportunities and challenges for Australian industry and the science and technology community.

Rear Admiral Greg Sammut, Head of the Future Submarine Program, will be presenting to you later this morning and I’m sure he’ll give you more detail on that process.

Briefly and in relation to the Future Submarine Combat System; the Government has endorsed the combat system and heavyweight torpedo jointly developed by the United States and Australia as the combat system and main armament for the Future Submarines.  This combat system will be integrated in Australia and we will engage a suitably qualified and experienced industry partner as a combat system integrator.

This decision was not one that was taken lightly; the selection balances key considerations including high levels of interoperability with our key ally, the United States, opportunities to de-risk the combat system for the Future Submarine, and synergies arising from commonality between Collins and the Future Submarine.

Importantly the commitment to select a combat systems integrator and to integrate the systems in Australia is a down-payment on jobs in Australia, in Adelaide - real jobs that are likely to begin work as soon as 2016.

To that end, last week (12 November), the Department of Defence commenced a limited tender process with Lockheed Martin Australia and Raytheon Australia to choose a combat system integrator.  These two organisations have the experience and the ability to integrate the AN/BYG-1 combat system and the Mark 48 Mod 7 torpedo into the future submarine in Australia.  This decision will ensure that we have a combat system integrator in place to work with the international partner selected to work with Australia on the Future Submarine.

As I noted earlier, delivering the Future Submarine capability that Australia needs – a regionally superior submarine possessing the highest quality stealth, intelligence and strike capabilities, and with the highest levels of interoperability with United States capabilities – will be a challenging and complex undertaking.

Were Australia just buying submarines alone, that would certainly be true.

We also need to remember though that Australia will be acquiring the Future Frigates, Offshore Patrol Vessels and submarines at effectively the same time.

We will have three complex build programs, all involving Australian industrial capability and capacity, effectively underway simultaneously.

The complex project management capabilities of Australia – in Defence and in industry, the science and technological and engineering capabilities of Defence, industry and academia, and the infrastructure of Australian shipyards and the capacity of their workforces will be significantly stretched by these three projects.

It is in this perhaps “lull before the storm” where the Government, the Department of Defence and Australian industry, working with selected international partners, will need to work closely together to develop a plan that ensure we can deliver these three critical Defence capabilities – Frigates, Offshore Patrol Vessels and submarines – in a manner and way that meets schedule, cost and capability requirements.  It’s something that each of us here will need to contribute to, to ensure that we are successful.

Let me reinforce that Australia’s long-term security and prosperity is this Government’s highest priority.

The forthcoming Defence White Paper will provide our plan to ensure that we can approach the future opportunities and challenges with both confidence and strength.

Our Future Submarines are an essential component of our future force plans.

Our Future Submarine must give us a significant capability edge and I am very focused, very focussed on getting this right.

I look forward to hearing of your further deliberations today and tomorrow, and of your continuing contribution to the development of Australia’s submarine capability.

Thank you very much for the invitation to present today and I wish you the very best for the conference.