Minister for Defence – Address to the American Chamber Of Commerce in Australia

Let me acknowledge my two very dear friends Teresa Gambaro and Bridget McKenzie, my two colleagues from Parliament, lovely to see you here at this event, it’s a very important subject to Australia and I’ve very pleased that you’re both here.

Also my good friend Ambassador John Berry, I’m glad Maureen Dougherty is sitting between us because otherwise we’d just get up to so much mischief sitting together on the table.

Niels [Marquardt], thank you for putting on the event today and my congratulations on the success of the Chamber, you’re doing a fabulous job.

Maureen, as President of Boeing [Australia and South Pacific] it’s an absolute delight to discuss all the good things we’re doing with Boeing, and we are doing many good things.

Lastly, distinguished guests, CEOs and members of the Chamber, can I acknowledge Air Chief Marshal Binskin who is simply doing an absolutely magnificent job with the challenges that present themselves day in, day out.

We’ve had MH370, we’ve had MH17 and now we’re engaged with 600 people being deployed to the Middle East.

May I say to you all it’s an absolute delight to work with professional people who know what they’re doing.

Thank you for inviting me to speak with you today about Australia’s Alliance with the United States.

It is the anchor of stability in the Asia Pacific and beyond, and our close cooperation on defence and security remains vital to both countries and in both of our national interests.

In addition to our strong security ties under the Alliance, the US is Australia’s most important economic partner.

At the end of 2013 the US was ranked as our third-largest partner for two-way trade at almost $55 billion worth of goods and services, and ranked first for two-way investment with over $1.1 trillion of investment between the two of us.

 Our bilateral trade has grown by around one third since we entered into a free trade agreement in 2005.

We are continuing to work with the United States, both bilaterally and multilaterally, through organisations like APEC and the G20 to promote trade liberalisation globally.

 As the host for the G20 this year we are using this opportunity to push for global growth in collective GDP and jobs.

Prime Minister Abbott will lead this agenda at the G20 Leaders’ Summit in Brisbane next month as I’m sure most of you are aware.

 Many of you here today will be at the forefront of the work that will realise those very important goals for our country. We, as a government, want to provide the environment for you all to have the success that we know you can achieve.

The intersection of our strong economic cooperation and our Alliance is what I’d like to address with you today.

Specifically and firstly, how we will provide the environment for success through the 2015 Defence White Paper; the continuing importance to Australia of our alliance with the United States; and finally the connections between Australia and the United States with military capability and industry.

 So let’s turn to the strategic settings and our budget.

 Protecting and promoting Australia’s security remains the Government’s most fundamental responsibility.

Our future prosperity will continue to be tied to the security and stability of our region. We are of course a trading nation whose economic growth and prosperity are reliant on the free flow of goods and services in the international trading system.

 Unfortunately, our region is home to some of the world’s most complex and long-standing disputes.

Rapid and significant strategic shifts in the region have created ambiguity and uncertainty, fuelling tensions.

Building a strong and prosperous economy and a safe and secure Australia is of course the Government’s number one priority.

 We are committed to maintaining a strong and capable Australian Defence Force for a safe and secure Australia, we are committed to increasing Defence spending to two per cent of our Gross Domestic Product over the next decade to maintain a credible, capable ADF.

 President Obama has expressed his appreciation for this commitment and for the fact that even under tough times Australia has recognised that it has to do its fair share and is taking steps to help maintain global order and security.

Government investment will provide Defence with the stable and sustainable funding growth path needed by Defence.

The investment the Government is making is significant and requires careful planning to ensure funding is appropriately prioritised and growth is practical.

The need to align defence policy, strategy and force structure in an affordable and deliverable way is why the Government has directed a new White Paper, a new Force Structure Review and a First Principles Review of Defence to be undertaken. I will visit each of these particular investigations in turn.

With respect to the White Paper, we will set out this Government’s vision for our defence strategy over the next two decades.

It will present a costed, affordable plan, a credible plan, to achieve Australia’s defence and national security objectives. It will set out the capabilities we require to develop a strong and capable ADF able to operate across a range of security environments.

The regional order that will determine Australia’s strategic circumstances out to 2035 – the focus of this White Paper – is one of transition and uncertainty where Australia’s strategic interests are not assured.

Global economic and military power is becoming concentrated in the Indo-Pacific, transforming the strategic environment at a scale and intensity that we have not seen since World War Two.

Judgements about Australia’s strategic environment and the changes underway in the Indo-Pacific and around the globe will inform the Government’s choices about the future force.

We can expect a more uncertain strategic environment into the future, due to, firstly, continuing territorial and resource competition – particularly with respect to energy; the increasing potential for state-on-state conflict; and finally the implications of persistent state weakness in our near region.

We must also be prepared to address broader challenges including extremism, terrorism, and other asymmetrical non-state based threats.

Australia’s national security will continue to depend on its regional and broader international relationships, we are deeply dependent on those relationships, consequently we must maintain a deep focus on building institutional defence partnerships across the Indo-Pacific region and on being prepared and capable of contributing to coalition operations further afield where our interests are engaged globally.

The Alliance with the United States will continue to be a central feature and a foundation stone in Australia’s defence and security arrangements. Strengthening our cooperation with the US, including through our intelligence, capability and technology partnerships, and strengthening the level of interoperability with US forces at all levels will remain key drivers and key objectives for us.

The force posture initiatives in northern Australia will improve Australia’s bilateral cooperation with the United States and provide opportunities to engage with the countries in our region.

Can I pause to say to Ambassador Berry, thank you so much for your leadership and contribution in getting the agreements necessary to facilitate the 1,200 Marines we have in Darwin today, without your leadership, assistance and advice the job would have been ever so much tougher.

We work together as two trusted friends should, I thank you for that, and when you go to Darwin next and meet your Marines I think you’ll see that they’re very happy.

 Underpinning the White Paper process is a Force Structure Review that will support the continued development of a credible and capable Australian Defence Force, it is critical that we are clear about what the ADF must be able to do and determining the force structure that can achieve those objectives.

 The Force Structure Review is where the hard calculus and trade-offs need to occur to ensure we have appropriate and affordable capability.

 We need an affordable and fit-for-purpose ADF to meet the wide range of challenges we could face.

We have a major challenge ahead of us with the need to acquire new submarines, new frigates, the Joint Strike Fighter being put in place as our primary platform for air combat capability, and the replacement of the extensive land vehicle fleet in coming years – these projects alone represent the major portion of Defence’s current capital investment allocation.

 We need to achieve these acquisitions while still modernising and sustaining other critical components of our force including the key enablers such as ICT, personnel and infrastructure.

 We are also clearly moving to a situation where information-based capabilities, whether in cyberspace, space, or electromagnetic domains, will underpin Defence’s capabilities and operations and in their own right be key areas of contest in future contingencies.

 Coming out of the work of the Force Structure Review and along with the White Paper, the Government will deliver a costed acquisition program – a 10-year Defence Capability Plan.

 The Defence Capability Plan will be realistic, credible, affordable and provide clear project approval timeframes.

 We will also deliver a new Defence Industry Policy Statement.

 This guidance, combined with the Government’s commitment to return Defence spending to two per cent of Gross Domestic Product within the next decade, will improve industry confidence to plan for upcoming projects, including development of infrastructure, skills and capabilities for the future.

 Investment decisions will be based on Defence imperatives, not industry requirements or regional economic requirements.

 We must ensure Australian taxpayers’ money is spent in the most efficient way to deliver the most affordable capability and the best capability for the Australian Defence Force.

Since July, the White Paper Expert Panel has been leading a programme of community and industry engagement to allow interested parties the opportunity to participate in a constructive discussion about Defence’s priorities and future direction.

 A public submissions process is complementing the programme of formal events.

Turning to the First Principles Review, while the White Paper and Force Structure Review will align defence policy, strategy and force structure in an affordable and deliverable way, the First Principles Review will ensure that Defence is fit for purpose and operates without waste.

 Essentially, it will develop proposals to create a Defence enterprise able to implement the White Paper, it is in other words a value-adding exercise.

I try and instil on all of the people inside the organisation that we want to hear what they have to say to value-add to what they do now. We can do things better, we just need to be told how.

 We are undertaking this Review because the Government cannot on one hand commit to increased revenue and on the other hand not ensure that this additional funding is used well and wisely.

 David Peever, formerly of Rio Tinto, is leading the team that will report to me early next year with a number of recommendations.

 The recommendations will ensure that the Department of Defence’s business structures support the ADF’s missions as determined by the White Paper and other whole of government responsibilities.

 These recommendations will also ensure a commercially astute, focused and accountable materiel acquisition and sustainment capability.

 They will improve the efficiency and effectiveness of Defence and also guide the implementation of recommendations from the Commission of Audit.

 So let’s turn to the Alliance, I want to talk more specifically about the Australia-United States Alliance.

The Alliance is built on common values, strategic interests and a long history of practical and friendly cooperation.

We reaffirmed this recently when the Foreign Minister and I hosted our US counterparts in Sydney during the annual Australia-United States Ministerial Consultations (AUSMIN).

 Since its formal inception in 1952, the ANZUS Alliance has continued to adapt and evolve to reflect new and emerging challenges.

 Our traditional activities – war fighting, training, exercising, intelligence cooperation and capability development – continue to underpin the Alliance.

 This is exemplified with our collective response to recent events in Iraq.

 We have seen the reports of atrocities against civilians, minorities and the Iraqi Security Force opponents of Islamic State of Iraq and the Levant (ISIL).

 As the Prime Minister has said, ISIL’s, or Da’esh’s, activities in Syria and Iraq are a major threat to regional and international security and it is important to do what we reasonably can to avert a potential genocide.

 As I said when I visited Iraq recently, it was two weeks ago that I was in Baghdad, we are part of a coalition of more than 40 nations that stand ready to help the new Iraqi Government to disrupt, degrade and ultimately delegitimise ISIL/Da’esh.

I used my time there to meet with both the Iraqi Prime Minister as well as senior US officials to reaffirm our commitment to this objective, and can I say the leadership of the US in the coalition is simply splendid, it imparts enormous confidence that we are doing the right thing with people who know what is required.

Australia has a long and distinguished tradition of assisting people in need and this is why Australia has joined the United States and other international partners to help anti-ISIL forces in Iraq.

Royal Australian Air Force C-130J Hercules and C-17A Globemaster aircraft have been supporting the mission which has involved transporting supplies and stores of military equipment, including arms and ammunition, as part of the multi-national effort.

The Australian Government has come to rely on the reach and speed of the C-17 and accordingly today I am delighted to confirm that we have begun the process of purchasing two additional C-17A Globemaster strategic airlift aircraft bringing our fleet up to 8 aircraft in total.

This is a wonderful piece of kit. Having been on board one coming into Kabul I can tell you – as those of you that are pilots will appreciate – when you’re coming in to land at Kabul airport the final approach commences at 10,000 ft. I have never before been in an aircraft where we commence final at 10,000 ft, but that is the nature of the environment in Kabul so when we come down in a C-17 the altimeter spins like a roulette wheel as we come down in a great big spiral.

It is a fabulous aircraft and I am so pleased that the Prime Minister agrees with me and that we are getting a further two.

 Since the first delivery in 2006 we have seen the C-17A Globemaster perform exceptionally well at the forefront of Australia’s military operations and humanitarian work.

 They have been integral in supporting communities in Queensland and Victoria after flooding and cyclones, to Operation Bring Them Home in the Ukraine and the search for MH370 off the West Australian coast.

Regrettably it is probable that Australian Governments will continue to call on this capability time and time again in coming years and decades, and as I say it is a most magnificent aircraft, Maureen I hope I’ve done you proud in talking about how good it is.

As you are aware, the Government has also decided to deploy a force of approximately 600 Australian Defence Force personnel, up to eight F/A-18F combat aircraft, an E-7A Wedgetail Airborne Early Warning and Control aircraft, and a KC-30A Tanker Transport aircraft to support Iraq.

On Friday, the PM announced RAAF Super Hornet strike aircraft have been authorised to carry out their first anti-ISIL combat missions over Iraq.

 The two aircraft, supported by a Wedgetail surveillance plane and KC-30 tanker, returned to base with their armament unexpended.

 In related developments, negotiations are nearing completion with Iraqi Government in Baghdad, we are working our way through appropriate legal processes before deploying any Special Forces onto the ground in Iraq.

Our Special Forces, most of whom are seasoned combat veterans, are among the best in the world and will putting their skills to great and good work inside Iraq.

 In addition to my recent visit to Iraq, I have also visited Afghanistan and was last in Kabul about a month ago.

 I met with Australian troops serving in national and coalition appointments inside the command and control structure of what was the ISAF operation.

Although Australia’s mission in Uruzgan was completed in December of last year we remain committed to Afghanistan and contributing to the post-2014 NATO-led ‘Train, Advise, Assist’ mission.

We still have around 400 personnel based in Afghanistan including advisors, support staff and force protection elements assigned to the Afghan National Army Officer Academy and the Special Operations Advisory Group based in Kabul.

We also have personnel providing advisory support to the Afghan National Army’s 205th Corps Headquarters in Kandahar and a continuation of embedded staff roles within Headquarters under the International Security Assistance Force.

Now to what’s happening in the Pacific. Our close relationship under the Alliance also extends to working together on humanitarian assistance and disaster relief, a very, very important output for the Australian Defence Force.

One example was the response to the Great East Japan Earthquake and Tsunami in 2011 where, importantly, success was delivered through the support of private industry as much as the government-to-government relationship between Australia, Japan and the United States.

The US, Japan and Australia, as well as industry, cooperated to deliver specialised water pumping equipment from my great state of Western Australia to help bring the Fukushima nuclear power plant under control.

The US Government identified that Bechtel – a famous US company that manages the back-end of the Virginia-class submarine – had a water pump located in Western Australia and agreed to donate it as part of the relief effort.

Bechtel personnel in Australia then trained Tokyo Electric Power Company employees how to operate this great big pump which was then transported to Japan, of course, by the C-17.

Finally, to ensure that it could be installed and used successfully, the US Air Force personnel in Japan custom made parts to install the pump at Fukushima to help cool the reactor.

It was something that I am very, very proud of as an Australian, to be working in such a cohesive team with our friends in both Japan and the United States.

Beyond our traditional activities our cooperation continues to expand in new areas such as space and cyber, reflecting the Alliance’s dynamism and adaptability.

From Australia’s perspective, strategic engagement with the US remains vital to the peace, security and prosperity of our region and both our nations have a vital stake in upholding a rules-based global security order.

Indeed, the United States’ presence in the Indo-Pacific and its network of relationships – of which the Australia-US Alliance is a crucial part – has underpinned the region’s stability since World War II.

We have benefitted enormously from the stability of our region and beyond up into east Asia, that has largely been as a result of US leadership.

This stability has provided the foundation for the dramatic economic growth that we have witnessed across Asia, from which all countries in the region achieved substantial benefit.

As economic, political and military influence continue to shift toward the Indo-Pacific it is in Australia’s and the region’s interest to support a strong US presence as a means of upholding regional stability, a strong US presence in our region is essential.

This is why Australia has repeatedly conveyed its support for the United States’ rebalance to the region.

 This is also why Australia is working closely with the US to implement the Force Posture initiatives in northern Australia.

Those initiatives, which encompass the rotational deployment of US Marines and, over time, increased US aircraft rotations, are a natural extension and evolution of our existing arrangements and collaboration and our deep friendship.

They are a tangible demonstration of our shared commitment to regional stability and practical cooperation under the Alliance, they provide valuable opportunities for training between our militaries to maintain readiness and increase interoperability, and they are a means for greater collaboration between Australia, the United States and our regional defence partners to build regional cooperation and our capacity to respond to future contingencies.

To facilitate the full implementation of the force posture initiatives, Foreign Minister Julie Bishop and I, with our United States counterparts, signed the legally-binding Force Posture Agreement at the Australia-United States Ministerial Consultations (AUSMIN) in Sydney on the 12th of August this year - that’s the agreement that John Berry and I worked through in some detail and I’m very proud to say we’re still friends and we still talk about it very proudly.

This important new agreement will provide a robust policy, legal and financial framework to allow the full implementation of the force posture initiatives.

It’s a term agreement of 25 years and I’m very, very pleased to have been the Defence Minister in making that Agreement come to pass and become a reality.

Over time, full implementation of the initiatives will see the rotational US Marine presence grow from its current size of 1,150 personnel, to a full Marine Air-Ground Task Force of 2,500 Marines, aircraft and equipment.

At this year’s AUSMIN, we also agreed several new initiatives to strengthen and enhance Australia’s and the United States’ security and defence cooperation in the region.

We welcomed Japan’s efforts to make a greater contribution to international peace and stability, we also committed to enhance trilateral security and defence cooperation with Japan, including through the Trilateral Strategic Dialogue and further developing existing trilateral exercises.

We committed to continue working together to counter the growing threat of ballistic missiles in the Indo-Pacific region, including by establishing a new bilateral working group to examine options for potential Australian contributions to such a defensive system.

We acknowledged the important contributions our defence personnel have made together to global security, including in Afghanistan.

We agreed on the importance of maintaining the hard-won interoperability gains from over a decade of operations, particularly between our Special Forces.

We also noted the deep defence industry collaboration between our two countries, with Australia having committed to the purchase of a range of important capabilities, particularly in the aerospace domain, from the United States.

This includes the fabulous F-35 Joint Strike Fighter, the EA-18G Growler, P-8A Poseidon – and I can say that with MH370 I was able to observe personally the rate of effort of that new aircraft, it is very impressive – and of course the MQ-4C Triton maritime surveillance unmanned aerial systems and the E-7A Wedgetail early warning aircraft.

These are all quite amazing capabilities that never cease to impress me with their capacity to expand their capabilities with future technological advancements; they are all very successful platforms going forward.

Before I speak about some of the specific instances of defence industry collaboration I think it is important to remind you that the Defence Trade Treaty of our two nations is very, very significant.

Earlier this year, the Australia-United States of America Treaty on Defense Trade Cooperation came into force.

 This Treaty provides greater access and sharing of equipment, technology, information and services between the two countries.

It facilitates the export of controlled goods within an approved community, without the need for an export licence.

 Significantly, only Australia and the United Kingdom have this level of access with the United States.

Since 2007 Boeing has awarded 40 Australian companies 253 export contracts with a total value of $343 million.

 This work has been awarded under the Defence Materiel Organisation’s Global Supply Chain Program – which is a fabulous programme and I congratulate the DMO for it – which creates export opportunities for Australian industry in the supply chains of multinational defence companies.

An additional 137 export contracts valued at around $250 million have been awarded by other primes to Australian companies under the Global Supply Chain Program.

US companies have supported Australian industry to achieve higher certification levels and become more cost conscious.

The enduring outcome is for Australian industry to become more internationally competitive and provide improved price and performance benefits to both the US Military and the Australian Defence Force.

I’m excited to announce a new initiative by the American Chamber of Commerce today: the Defence and Security Working Group.

This Working Group will support the same spirit of genuine industry engagement with Defence as the White Paper industry consultation process.

Our strategies for the future can only be successful if they are well-informed.

The Working Group, aimed at defence, security and dual-use industry members, will provide a forum to identify opportunities, challenges and topics of concern that hinder their ability to work with either the US or Australian governments.

I applaud the American Chamber of Commerce for this initiative and I look forward to hearing the pragmatic ideas that will flow from this very good idea.

As ideas form through the discussions from the Working Group I’d encourage you to consider using these as the basis for submissions to the Defence White Paper.

Together the Defence White Paper, Force Structure Review and First Principles Review will set the stage for a secure Australia for the next twenty years and beyond.

This is about bringing together all aspects needed for this success, including the Alliance with the United States and our economic cooperation.

From our shared values and interests our Alliance has been regularly reaffirmed, including in current operations and from high-level engagement through to the bonds between our people.

The business connections between us have also helped to ensure the continued security and prosperity of both nations.

 Thank you again for allowing me to speak with you today about the future of one of the most important roles for government.

The business side of our great Alliance is undeniably strong, and from that strong foundation I am confident in the continued security and prosperity of both the Australia and the United States.

This relationship is a very, very important asset to Australia and I thank you for the contribution you all make to sustaining it, it is simply wonderful.

Thank you very much.

QUESTION:

[inaudible]…knowledge-based leadership you have given the nation in Defence, it is greatly appreciated by all.

I want to throw a difficult one to you. I have often, as someone who is not from the Defence establishment, queried the utility of Defence materiel purchases as a job creation programme for Australia, Defence in my view is too important, and you have recently taken the very bold decision, and managed it pretty well through the market place of Australian politics, of saying you’d rather save billions of dollars purchasing submarines off the shelf earlier, with better technology, enabling you to buy a lot more, some of which you detailed in your speech, than necessarily sinking a lot of money into one project in Australia.

 Can you expand on where that might go in the White Paper given governments of both political persuasions have in the past used Defence to win seats as opposed to spending the money more sensibly in favour of a better equipped materiel program?

MINISTER:

Thank you Michael for that question. With respect to submarines, we are confronted by some serious issues.

We haven’t made any decisions with respect to what we will do, where we will do it, and how much that will cost, but can I say we have a clean slate.

The project was announced with great fanfare in 2008 – very little has been done, so I am under no constraint, I have no contractual obligations to anybody with respect to how we go forward with submarines.

I have opened the box marked SEA 1000 and there is nothing in it. I think I might have observed a cobweb in one corner.

That being said, the primary concern for us is having good capability for the Australian Defence Force, but not at any cost.

It is also important that we factor into those considerations the fact that one day we might need indigenous capability to sustain the platforms going forward.

The best similar experience I can relate to you is Rosebank in Victoria. The wing-valve on the F-111 failed and we could not get a replacement. Now the F-111 was vital to our national security and had to be sustained and maintained, so Rosebank manufactured the part.

It’s a lesson well learned but it is not a lesson, as I said in my speech, that we use for economic and regional economic purposes.

The primary focus of Defence is to have capability that can respond to contingencies and threats – reliably – and that is what this White Paper is about, taking what the Prime Minister and the Treasurer have bequeathed to us as a funding envelope and making the very best of it, that’s the challenge that we’re confronting and that’s what we are seeking to do.

QUESTION:

Just while wait for another hand in the room I want to ask you what’s the time frame on the C-17’s?

MINISTER:

Well, I am hoping tomorrow! But I guess that might be a bit forlorn.

It’s a Foreign Military Sale, we’ve got to get that through the US State Department and the Defense Department.

With FMS the US Government actually buys the aircraft and transfers it across to us.

It’s a good system, we are very pleased with it and I am hoping that we’ll see some more tangible information before Christmas as to the ETA of those aircraft.

QUESTION:

Thank you for your speech. The Prime Minister was asked specifically this morning whether there were any circumstances in which the Government would consider deploying ADF forces for a broader ground campaign in Iraq. He replied we would be in a better position to judge what might be desirable down the track once we are in there.

It seems to be fairly conspicuously refusing or declining to rule that out, can you just give us the Government’s position, or clarify the Government’s thinking as of today, on the possibility of ground troops? – Is it on the table? Is it off the table?

MINISTER: 

David I think we will be in a much better position to assess that once we are in there, but I do appreciate you throwing me that bone, thank you very much.

QUESTION:

Brendan Nicholson from the Australian Minister, you are by training a lawyer-

MINISTER:

Well don’t hold that against me.

QUESTION:

No no, not at all, you are probably an ideal person to have gone to Iraq to negotiate the agreement under which our troops will be deployed in Iraq, including the complex legal protection that they need.

Now are you able to explain to us why it has taken so long, apart from the fact they’ve had holidays in Bagdad which seems to be slowing the process down, but how complex is the arrangement?

Is there anything that is actually holding it up? Are there any particular protections that we are requiring that are not being provided or is it simply a matter of getting the process completed?

MINISTER:

Well Brendan that’s a very good question. We are very skilled at deployment into overseas locations and all of the legal authorities surrounding that are second nature to the way that we go forward, the new Iraqi Government has no such experience.

There are a very large number of countries that are seeking to provide assistance and they are a little bit swamped in terms of the standard operational procedure of Defence forces as and when they deploy into Iraqi sovereignty, so I am inclined to cut them a lot of slack.

 Prime Minister al-Abadi had just begun to get his footing when I met him, he is a very outstanding person.

 We will work with the Iraqi Government firstly to ensure they have confidence and faith in us.

I said to him this is a fight that the Iraqi Security Forces must fight,