Minister for Defence - FIVEaa Radio Adelaide radio interview with Leon Byner

Topics: South Australian jobs, Navy capability, shipbuilding

LEON BYNER:

Well, we have the Federal Defence Minister, Senator Marise Payne, who has called in. Marise, I haven’t spoken to you before so it’s nice to meet you.

MINISTER PAYNE:

It’s very nice to meet you to Leon.

LEON BYNER:

Now, tell me why you are calling.

MINISTER PAYNE:

Because I understand that you have an interest, as all Australians do, in the strength and future of our Navy capability and I thought there might be a couple of issues that you would like to discuss.

LEON BYNER:

Now the first one is yesterday, and I’m sure you will get the tenor of this, the Prime Minister was here addressing about 1200 business people and he talked about all the levers he wants to pull to ensure South Australia gets as many jobs as possible, people leave the venue and then find that Cadiz has just been awarded 3000 jobs, so I guess they’re scratching their heads.

MINISTER PAYNE:

Well I think 3000 is a significant exaggeration myself, but we can talk about the finer point.

LEON BYNER:

How many then?

MINISTER PAYNE:

Well, I would imagine for a capability of this size in a system that already builds these sorts of ships it would certainly run to the hundreds, that is certainly the case. But Leon, it is I think really important to understand the circumstances in which we in Australia find ourselves.

When we were elected in 2013 it was already apparent that the supply vessels needed replacing, they are called the Sirius and the Success. That was already apparent. But nothing had been done about that in the preceding years of the previous government. Nothing.

They had made an announcement at the death knell of their government in May to say that they would “at the earliest opportunity”, and I’m quoting, “replace Australia’s supply ships HMAS Success and HMAS Sirius.  This will include examination of options for local, hybrid and overseas build or the leasing of an existing vessel.” But they did nothing.

When we came to government at the end of 2013 and began to look at the needs for Navy in that particular regard, it was deemed a significant priority for Navy the Sirius and the Success were really at the end of their capable life and need replacing as a matter of priority.

So, based on advice from Defence and based on the international experience of ships of this type, we gave first pass approval in June of 2014 for what was a limited tender between Navantia of Spain and Daewoo Shipbuilding in Korea for the construction of those ships.

LEON BYNER:

Okay, you knocked Australia out of this. Why is that? Because you felt we couldn’t do it, or is there another reason?

MINISTER PAYNE:

No, no, no. It’s not about having the capability to do it or the skills, if you like, to build the ships. At the time it was about not having the available infrastructure to build the ships and let me be very clear about that.

The previous government commissioned a report which was called the 2013 Future Submarine Industry Skills Plan and it canvassed shipbuilding skills across the board and it told them, it told them, that the common user facility in Adelaide which supports your ASC, our ASC, was not capable of accommodating the large supply ships as the current shiplift would be required to be significantly lengthened in order to carry vessels the size of the replacement supply ships. They were told that in 2013 and they needed to be very clear, they should be very clear, with the public about why they are not telling the truth about that.

And Leon, lets bear in mind for all of your Adelaide listeners who will have seen down on the water at Osborne the Hobart, the Air Warfare Destroyer, sitting in the water and the second of those ships sitting up on the hard stand, we are talking about two more ships which are three times the size of those Air Warfare Destroyers.

LEON BYNER:

My question is this: you understand well what the “Valley of Death” is, the Defence Teaming Centre are telling us that unless there is something substantially extra that’s going to be offered they are going to layoff staff and they already have of course. What’s your response to that?

MINISTER PAYNE:

They already have, because no shipbuilding orders were placed by the previous government for Australian-built ships in the entire time of their tenure.

LEON BYNER:

So what orders are you going to place?

MINISTER PAYNE:

We’ve already committed to a continuous ship build in Australia, and a $30 billon order – or the order of $30 billion, in relation to the Future Frigates just for starters, and obviously the Air Warfare Destroyers are underway.

LEON BYNER:

How much of that is in SA, Minister?

MINISTER PAYNE:

All of it. So that is a commitment that was brought forward in 2015 by this government for the acquisition and build of nine Future Frigates. A very, very substantial shipbuilding undertaking.

LEON BYNER:

So how many jobs is that and when does it start?

MINSITER PAYNE:

So the Future Frigate steel will be cut in 2020 and we estimate over the period of that build, that and other shipbuilding activity which is occurring will lead to thousands of jobs.

LEON BYNER:

Alright, I need to ask you this: when it was announced that Cadiz has got approximately 3000 jobs, you’re saying it’s hundreds, whatever the situation is, callers are saying the Prime Minister talked about smart tendering that is tendering as much as possible to use local products?

MINISTER PAYNE:

I don’t have—this is part of the next step in the process which is a negotiation period with the builders. But we do have an undertaking as part of the tender process for at least $100 million worth of Australian engagement in this particular project. So we have endeavoured – and the project was placed, of course, long before I got this job – we have endeavoured to maximise and engage Australian content, at this stage, to $100 million and, frankly Leon, if we can make that more, then I would like to do that.

LEON BYNER:

Alright, so in view of what you have just told us, how stunned are you now that there has been such negative reaction to the announcement of up to 3000 jobs at Cadiz and business people ringing this show, very prominent ones, virtually threatening to not vote for you or go anywhere near you?

MINISTER PAYNE:

So Leon, I think if the people who are our political opponents are not prepared to deal in facts and tell the truth, then that certainly doesn’t help. But can I just explain one more thing about where we are in infrastructure at the Adelaide shipyards. So, we have the Air Warfare Destroyers underway being built there now. To actually have built these ships there at the same time we would have had to extend the shiplift itself. So that is a massive undertaking with potentially a very significant impact on the Port river.

We would also need to install new cranes which were capable of lifting the large blocks that are required for the supply ships and build a new wharf to accommodate the build. None of that can actually happen before the third Air Warfare Destroyer is completed and has undergone its testing. So those infrastructure upgrades couldn’t have been started before 2020.

Now, what we have tried to do is meet the capability needs of the Navy, and these supply ships are a priority. That we are continuing and finalising the build of the Air Warfare Destroyers in Adelaide in front of our eyes right now, and commissioning 12 Future Frigates with the cutting of steel in 2020 in Adelaide.

LEON BYNER:

Alright, got a question now. Submarines; now, I know there is a competitive tender process, my question is this, two fold: when does that tender process and timing finish and is the government obliged to take whoever offers what will be considered to be the best deal?

MINISTER PAYNE:

Which one do you mean, Leon? For the supply ships?

LEON BYNER:

No, I’m talking about submarines.

MINISTER PAYNE:

Oh sorry, you’ve moved onto submarines. Can I just correct myself; I said 12 Future Frigates and I did mean to say nine, my error. In relation to the Competitive Evaluation Process, what will happen there – and you would be very aware that we have three international participants in that; France, Japan and Germany – the process is to provide advice to Government during this calendar year and that advice will be received by Government and we will make a decision based on what the submissions have told us.

LEON BYNER:

Now, Chris Pyne has told this program that there has been a very substantial shift and focus on Australian taxpayer’s money using Australian goods and manufacturers and creating jobs. Given there is this changed focus, does that change anything in this tender process?

MINISTER PAYNE:

It doesn’t change anything in the tendering process itself and, you would know that it was again canvassed over three options which was overseas, hybrid and domestic build. It doesn’t change anything in that process, but it does change the approach the government is taking in terms of our focus of engagement with defence industry and it’s one of the key reasons why, with Minister Pyne, the Prime Minister and I announced the location of the Centre for Defence Industry Capability this week as being in Adelaide itself. We went to an exceptional business there in Adelaide called Fugro LADS which does high-tech work and is leading in its space of innovation and is a great Australian defence industry story.

LEON BYNER:

Alright, so in a nutshell, what you are offering South Australia – I want to be very clear on this – what you’re offering South Australia precisely is?

MINISTER PAYNE:

Well, I would say that they would be part of the $100 million of domestic content in the supply vessels and certainly in the sustainment of the supply vessels post their construction; that we have committed to bringing forward the build of the nine Future Frigates, which is a $30 billion program with the cutting of steel which is formally, explicitly based in Adelaide and will bring thousands of jobs and significant infrastructure upgrades, because of course we won’t be able to do all that without it, to the Adelaide shipyards.

LEON BYNER:

Alright, when you’re in Adelaide next come in and talk to us.

MINISTER PAYNE:

Love to, Leon, thank you very much.