Address to the Australian Financial Review National Security & Intelligence Summit

It is a pleasure to be here at the Australian Financial Review National Security & Intelligence Summit. Today is an opportunity to compare notes, share experiences, and put forward ideas about how Australia will thrive in a volatile region.

One of the markers of the age we are living in is the rapid pace of change.

The challenges we face are growing in number and complexity.

Over the last one hundred years, we have been part of the Technology Revolution. This translates into a need for military investment in the best equipment to protect our service men and women who are right now in dozens of operations around the world safeguarding our freedoms.

Further to this, we are consciously making decisions to ensure we are prepared to combat the threats of the future, including the ones that do not yet exist.

Defence Priorities

The Coalition Government takes seriously our responsibility to provide for the defence of our country, and to support the women and men who put on the Australian Defence Force uniform every day.

More than two years ago, we delivered the most comprehensive Defence White Paper in Australia’s history. We backed it up with a commitment to increase the Defence budget to two per cent of Australia’s Gross Domestic Product within 10 years of coming to office. I’m pleased to say that under a Coalition Government, we will achieve our goal three years ahead of schedule, in 2020-21.

This is a sign of the Coalition’s commitment to Australia and the Australian Defence Force, to ensure that we can acquire the best capability in the world. We are stepping up our posture and tempo of our engagement, to be proactive rather than reactive. We are using Australian capability and influence to shape our region, rather than simply responding as it evolves.

To promote security and stability in the region, I see four broad priorities to focus our efforts into the future.

The first priority is to manage great power competition in the Indo‑Pacific. We see today that the relationships between the great powers of the region are becoming more competitive. There are worrying signs of a return of might is right’. That is just one of the reasons we regard the United States as our most important security partner. For decades, it has used its considerable power to sponsor rules and institutions that have benefited countries of all sizes and provided the stability that has allowed this region to grow into the engine room of prosperity and growth it is today. But the United States will find it increasingly difficult to provide this security unchallenged – and frankly we should not expect it to underwrite that security alone.

So, this aligns with the second priority, to pursue stronger military-to-military relations with a wide range of partners, new and old. We are stepping up our engagement with other partners who share the values that we place in a rules-based order. Crucial to this is ensuring that the relationship between Indonesia and Australia remains healthy and productive. This is more important than ever – both countries will need to show leadership against a backdrop of shifting regional dynamics.

Recently, I told Indonesian Defence Minister Ryamizard that we are neighbours with a common aspiration for a good neighbourhood. The Comprehensive Strategic Partnership signed by Prime Minister Morrison and President Widodo in Jakarta in August attests to that. Indonesia’s continued leadership on counter-terrorism is to be commended. It is central to our efforts to work with the region to jointly address the threat posed by foreign fighters coming from the Middle East – one of my key priorities in this role, which I will return to shortly.

Our defence engagement with Japan continues to mature on a steep upward trajectory. I co‑hosted the Australia-Japan 2+2 Foreign and Defence Ministers’ meeting in October in Sydney, where we agreed to a new suite of initiatives to drive our defence and security relationship forward. This included an initiative to enhance the complexity and sophistication of our exercises, so we can deepen our understanding of each other and our ability to operate together.

A sign of our renewed commitment to this outcome is the first ever fighter aircraft exercise between Japan and Australia – BUSHIDO GUARDIAN – to be held in Japan in 2019. And this year, for the first time, India sent fighter and transport aircraft to the Northern Territory, to participate in Exercise PITCH BLACK. The Australian and Indian armies also held their first joint counter- improvised explosive device activity. This is our proactive engagement strategy in action – strengthening relationships with longstanding partners, and building relationships with new ones.

Last month, the Prime Minister announced a generational realignment of our framework and support to the South Pacific. Whilst I will go into detail about this initiative later, a priority for me in the months ahead will be putting the defence elements of that into practice.

This builds on our $2 billion Pacific Maritime Security Program, where we are delivering bigger and better Guardian-class patrol boats to replace the Pacific-class. The Government delivered the first boat to the PNG Government just last Friday, on schedule and on budget.  For the very first time, that program will also include aerial surveillance provided by civilian contractors.

Events of recent years have shown only too clearly that we face a broad range of security challenges in this unpredictable 21st century, which brings me to my third priority: Dealing with the threat of terrorists coming to or returning to South East Asia from the Middle East.

Despite the success we have had in the Middle East against Daesh, the scourge of terrorism endures. The siege at Marawi showed all too clearly the determination of terrorists to establish strongholds in our region. Australia’s support to the Philippines was swift and effective, and a model of how we would like to cooperate with regional partners on shared challenges. I do recognise the leadership of Secretary Lorenzana in addressing the threat of foreign fighters in our region.

My friend and colleague Marise Payne, built on this experience by inaugurating earlier this year the South-East Asia Sub-Regional Defence Ministers Meeting on Counter-Terrorism in Perth as the then Defence Minister. The meeting agreed to practical steps for cooperation between the region’s defence forces.  I’m grateful that my Indonesian counterpart will host the next meeting in 2019.

It is vital that defence forces in our region continue to work together: to be engaged and prepared to defeat the common threat of terrorism. I have great faith in our proactive approach to elevating international defence engagement as core Defence business. But for Australia to have the ability to positively shape our region – and to help other nations to do so – we need to be credible.

That brings me to my fourth priority – enhancing our own military capability and presence in the region, so we have good options to respond to a wide range of contingencies. We are engaged, as Michael Stuchbury said, in the largest recapitalisation of our Defence capability in peace time history, including the largest regeneration of Australia’s maritime capability.

I am particularly proud of is the emphasis we place on supporting Australian industry to deliver that capability.

To say that defence capability is becoming more complex is an understatement. Many of the technologies that exist today wouldn’t have been imaginable 50 or 60 years ago. Who would have expected the Nulka active missile decoy to become one of Australia’s most successful defence exports, with well over $1 billion in exports. Or that the REDWING SILVERSHIELD system being delivered to Afghanistan would save countless lives providing protection against radio controlled IEDs. This highlights the point that if we don’t invest in building up our local industry, we will fall behind.

Pacific Pivot

Australia’s security is profoundly linked with our partnerships in this region. It is the region where Australia can make a big difference. It is, after all, where we live. As the Prime Minister describes it, we are opening “…a new chapter in relations with our Pacific family: one based on respect, equality and openness.”

The Pacific Pivot is a multi-billion dollar series of initiatives to deepen our engagement in the Pacific. Within Defence, it includes six key areas of focus.

Firstly, a dedicated ADF team will provide training to support the military and security forces of Pacific Island nations in priority areas. Headquartered in Australia, the ADF Pacific Mobile Training Team is a Pacific Support Unit that will travel throughout the region to understand the needs of the region, and then develop training packages to grow the requested skills.  This will strengthen capacity, resilience and interoperability.

Secondly, the Australian Navy will increase its deployments in the Pacific through more exercises and training. Our expansion across naval activities will focus on maritime security such as transnational crime and drug trafficking.

Thirdly, we will implement new arrangements for a dedicated response to regional humanitarian crises and natural disasters. We have already put in place arrangements to make sure that the ADF has a dedicated humanitarian and disaster relief vessel, a large hulled vessel,  to support increased engagement with our Pacific partners.

The fourth focus area is committing support for annual meetings of Pacific defence and police chiefs. Such a forum will help us foster stronger relations, and develop a shared understanding of the common security challenge in our region.

Next, we will provide support for a security alumni network. The network’s primary focus will be on maintaining connections and deepening relationships with the many senior police, civilian and military leaders who have participated in the Defence Cooperation Program over decades.

And finally, the Pacific Pivot will see an increase in ADF sporting engagements with Pacific island military forces. We know that sport brings people together, so this initiative aims to help build personal links across our region, one tackle, strike and goal at a time.

We have also announced significant partnerships across the Pacific in recent times.

In Papua New Guinea, Australia has agreed to a major joint initiative at the Lombrum Naval Base in Manus Province, in order to address the common security challenges that we share. This new initiative will enhance PNG’s ability to protect its sovereign territory and manage its borders through a broad program. This will include mentoring, tailored training, infrastructure development and shared facilities at the Lombrum PNG – Australia Defence Force base.  And I’m delighted that the United States announced recently in Port Morseby that they will join supporting this base, and I’m pleased to see Jim Caruso here on behalf of the US. This development will also improve the interoperability between the PNG Defence Force and the ADF and will provide for increased Australian ship visits over time.

We will partner with Fiji to transition the Blackrock Camp into a regional hub for police and peacekeeping training and pre-deployment preparation. This will deliver stronger interoperability between the ADF and Republic of Fiji Military Forces.

And most recently we have committed to partnering with Vanuatu to further build their security capability, including:

• Significant infrastructure upgrades for the Vanuatu Mobile Force and Police Maritime Wing;
• Enhanced training and leadership opportunities for all three arms of the Vanuatu Police Force; and
• A new Australian Defence Advisor in Vanuatu to support the strengthening of this important security relationship

Importance of a Sovereign Defence Industry Capability

We have seen in past conflicts how quickly supply chains can become stretched, and stocks of materiel depleted when we can’t rely on ourselves. I often draw upon the example of our Oberon class submarines which were in service between 1969 and 2000. In the lead-up to the Falklands War in 1982, we relied on our allies  to maintain our fleet, the British in this case. But alas, at around that time, our order for spare parts understandably could not be filled.

While we and the UK are still the best of friends, to me – as Australia’s first Defence Industry Minister – this serves as an important reminder of the importance of our sovereign defence capability. Whilst I acknowledge we can’t build everything here, I am a firm believer that if we can and the price is right, then we should.

So to support Australian defence companies to provide this capability, in April this year the government released the Defence Industrial Capability Plan. It is a foundational document that baselines our industry today and maps out where we need to go. We have introduced a Sovereign Industrial Capability Assessment Framework, which provides an initial list of 10 Sovereign Industrial Capability Priorities. These are capabilities of such importance that we must retain our sovereignty over them into the future.

We have also made the unprecedented decision to embark on a $90 billion continuous shipbuilding program. This is underpinned by a Naval Shipbuilding Plan that will bring together all the elements required to deliver on that commitment.

Earlier this year we announced that BAE Systems will design the new $35 billion Hunter Class anti‑submarine warfare frigate. This will not only be a cutting-edge capability for our Navy, but will also be a strong boost to Australia’s economy. Over 6,300 jobs will be created nationwide.  Already 500 Australian businesses have been pre-qualified to be part of the Hunter class supply chain. And $17 billion will be contributed to the national economy according to the Oxford Economics report released last week.

Uniquely, it also offers opportunities for closer interoperability with important partners who are either purchasing the vessel, or may do so in the future – such as the UK, Canada, and hopefully New Zealand.

Our Hunter Class will be equipped with our home-grown CEA phased array radar developed here in Canberra, which will go hand-in-hand with the Aegis Combat Management System and an Australian tactical interface, being developed by SAAB Australia. These are world-class technologies, and will provide the Hunter class with a leading-edge capability. We are also offering these capabilities to the United Kingdom and Canada, for installation aboard their own variants of the Type 26 Global Combat Ship.

This will be great for Defence, great for Australian industry, and will deliver significant benefits in operating our respective platforms together.

Our naval shipbuilding plan will end the boom and bust cycle created by Labor’s inaction and indecision that has previously prevented Australian defence industry from reaching its full potential. Labor made zero decisions to build any naval vessels in Australia.

In stark contrast, the Coalition Government is investing $90 billion dollars in continuous naval shipbuilding. Twelve submarines, nine Hunter-class frigates, 12 Arafura-class offshore patrol vessels, one hydrographic vessels which I announced recently, and as I mentioned earlier, 21 Guardian-class patrol boats, and I assume we will also build the large hulled HADR vessel for the South Pacific. Every single one of these 55 vessels will be built in Australia, using Australian steel. And we are keeping pace with our other ambitious plans.

Australia’s new maritime surveillance aircraft, the P-8A Poseidon, achieved initial operating capability five months ahead of schedule.In March we announced Rheinmetall as the successful tenderer for 211 new Combat Reconnaissance Vehicles – the Army’s largest ever acquisition project to date. This will involve a $10.2 billion investment in Australian industry over the life of the project.

But in developing our ambitions for Defence and industry together, we know the needs of the ADF alone are not enough to guarantee a sustainable industry base. So we are helping our industry to export, so it can withstand peaks and troughs in domestic demand.

Defence Export Strategy

Earlier this year, the Coalition released the Defence Export Strategy to provide a blueprint to help us grow our defence exports. The Strategy creates a structure for defence and industry that propels us from a country with little interest in defence exports, to a country that wants to be one of the top ten exporters in the world.

It is always pleasing to hear success-stories of many Australian defence companies – often small and medium enterprises – who are signing contracts to export to our friends and allies. Our presence in key markets is expanding – in North America, Europe, Asia and the Middle East. And I can tell you that in the September quarter, the Defence Exports Control Office approved over $3 billion of defence exports, a record so far.  And in the June quarter, applications for defence exports jumped by 25 per cent.

Conclusion

As we move into a more lethal, more contested and more rapidly-changing future, the decisions we make about where and how to invest our finite resources will matter more and more. We are making the decisions today to maximise the opportunities from every dollar spent. To achieve life-saving capability for the Australian Defence Force. To look for ways to better collaborate and build trust with our international partners and pool our respective resources.  To maintain security and stability in our region. To strengthen the economy that supports the livelihoods of so many Australians.

All of those opportunities are mutually reinforcing. They all strengthen our country and our ability to adapt to the changes we will face in the future.

We have never before had such a strategy-led approach to our nation’s defence, nor to our defence industry. While capability remains our number one priority, it’s a watershed in Australia for an Australian government to use the defence dollar to drive innovation, infrastructure, investment and jobs. I won’t declare victory prematurely, but our approach is certainly achieving benefits.

With the right planning and follow-through, I know that Australia will have good reason to be confident of our standing, influence and impact, in the world and our region of the future.

Thank you.