Minister for Defence - Interview on Lateline with Emma Alberici

Transcript

Interview on Lateline with Emma Alberici

Tuesday, 26 April 2016

Subjects: Submarine tender, naval shipbuilding industry, Australian jobs

JOURNALIST:

Marise Payne, thank you very much for being with us.

MINISTER:

Great to be here.

JOURNALIST:

Explain to our audience, if you will, why it's urgent at a time when debt and deficit is growing, why we need to spend $50 billion on military submarines – the most ever spent on an infrastructure project in Australian history?

MINISTER PAYNE:

I think that the Government has set the scene for this acquisition, this procurement process, most particularly through the Defence White Paper, which was released in February of this year. We've weighed the strategic environment in which we find ourselves and what is a very dynamic and changeable environment, through a Force Structure Review which was also commissioned through the Defence processes, that was the foundation for the White Paper.

We've made it very clear that there a number of pieces of capability, this one included, that we believe that Australia needs to pursue to ensure that we have the best possible protection for our national security, the best capability we can; and we have gradually in the past few months come to the fruition of a number of those processes and today, with the announcement of the submarines, was the most recent one of those.

JOURNALIST:

It's no secret that China was specifically upset by the Defence White Paper you mention and its discussion of Chinese territorial claims in the South China Sea. How big a security threat does the Australian Government see Beijing's increasingly muscular position, posture in the region?

MINISTER PAYNE:

Well, we've been very clear in relation to our views, particularly around activities in the South China Sea and more broadly, that although we don't take a position or express an opinion on the claims of the various parties, what we want to make very clear is that we expect the rule of law – the international rule of law – to be observed.  We expect that freedom of overflight, freedom of navigation will be preserved in movements around the area. We will continue to reiterate that view very, very clearly both to our Chinese neighbours and more broadly.

JOURNALIST:

American Vice Admiral Joseph (inaudible) most recently noted that by 2029, China will have at least 70 attack submarines. Our twelve won't be any match for them even if ours are regionally superior?

MINISTER PAYNE:

Well, we are part of a very broad contribution in the region; we work very closely with our allies – the United States and other parties within the region to make sure we present the appropriately strong and determined position that we need to. We've been very clear about that and made the acquisition process an important part of that calculation.

JOURNALIST:

How will the Australian Government measure return on that $50 billion investment?

MINISTER PAYNE:

Well I think one of the most important things I can talk about is the observation the Prime Minister made today about Australian jobs, an Australian build, Australian workers, Australian steel. Part of the plan of the Government in creating this level of naval capability, both with surface ships and submarines, is ensuring that for the first time we have a continuous naval shipbuilding industry in this country.

Now, we've before placed shipbuilding orders, most certainly, but they have been single projects and led to a boom and bust process; so what that means is you leave yourself open to losing the skills, losing the capacity amongst your workers and amongst your yards - we're very determined to avoid doing that.

So, the return to Australian industry, the Australian economy, the capacity we will have to engage, to innovate, to use our cutting-edge science and technology, particularly in these acquisitions, is going to be a very important measure.

JOURNALIST:

What proportion of the build will be done in Australia versus France and the United States?

MINISTER PAYNE:

Well, this is an Australian build of the twelve Future Submarines. That means that it will be built in Adelaide, at the shipyards there. It means that through the Australian Industry Involvement Program, which each of the CEP participants was required to complete – and certainly DCNS did that – through our Defence Industry Policy Statement, through ensuring that we now recognise industry as a Fundamental Input to Capability, and through our Centre for Defence Industry Capability, also located in Adelaide, that the overwhelming majority of this build will be Australian-based.

JOURNALIST:

But what proportion? We know some of it, for instance, we hear, is going to have to be built in France and obviously the combat systems that will come from the United States?

MINISTER PAYNE:

The combat system, the weapon system, the weapon itself in the heavy torpedo – the Mark 48 torpedo – the AN/BYG-1 combat system, they are part of the United States’ ability to work with us on these very important pieces of technology?

JOURNALIST:

?So, I guess the question is, is it the assembly in Australia or the build?

MINISTER PAYNE:

It is the build, overwhelmingly the build. And I think that is the most important message for Australian workers. One of the things about being at the yard in Adelaide today was the chance to say to the men and women that we met and we met some involved in the Collins Class sustainment, we met some involved in the AWD program, that we have such great faith in the capacity of the Australian workforce to rise to the challenge, and for new workers to come in. This is a very significant undertaking and this alone, 1100 jobs on the build and 1750 from the supply line process, the supply chain process, we were able to say to a number of those workers today: this is the future for naval shipbuilding in this country and you are an integral part of it.

JOURNALIST:

How many of the twelve submarines will be built in Australia?

MINISTER PAYNE:

The twelve of them.

JOURNALSIT:

Because we hear reports suggesting the winning bidders, DCNS, expect to at least build the first of the twelve in France?

MINISTER PAYNE:

Well we’ve indicated very clearly that the twelve submarines will be built here in Australia.

JOURNALIST:

The Opposition Leader Bill Shorten has committed a future Labor Government to building, maintaining, and sustaining all those twelve submarines in Australia. So what you’re saying is that your commitment is the same?

MINISTER PAYNE:

Yes, in fact we have a very effective maintenance and sustainment industry already, both in Adelaide and in Perth. They will continue and grow because, of course, we’re doubling the size of the fleet and we will have crossover between the Collins Class and the Future Submarine fleets as we phase one out and start with the new one, so definitely in that case, and the build is the twelve submarines in Adelaide.

JOURNALIST:

We know there were cost overruns and inefficiencies and productivity problems with the Collins Class and the in the AWD alliance. What lessons were learnt for the Australian Government through those process?

MINISTER PAYNE:

One of the really important lessons was about making sure that the design is complete, the design is right, and that you don’t 'push go' too soon on that process. So what we’re talking about here is the most complex piece of naval capability, in fact of Defence capability many people would say, manmade, in the world. So we need to make sure that the design process that we work through with DCNS is complete and is ready to go when the experts tell us that.

I think it would be very short-sighted to try and draw a calendar line on that in an artificial way for the purposes of Labor or somebody else meeting a political challenge, because we want to make very sure that the capability we get, is the capability we need for Australia to have the regionally superior submarines that we need.

JOURNALIST:

When will the twelve be ready?

MINISTER PAYNE:

So, the process starts now in 2016 in terms of the design, with the aim of having the first boats in the water in the early 2030s.

JOURNALIST:

The Australian Government today promised this deal with France will create 2800 jobs or thereabouts in South Australia. We’re hearing now from the French media that DCNS says the arrangement with Australia will keep 4000 people employed at their plant in France. If they’re mostly being built in Australia, how is it that 40 per cent more jobs will be created in France than here?

MINISTER PAYNE:

Well, I think there’s some enthusiasm around translation involved in that for starters, from the French to the English and perhaps French to Australian, even worse. But the most important aspect of this is that our modeling and our plans clearly show us that it is 1100 jobs in the shipbuilding process, potentially 1750 jobs in the supply chain process, and that’s without even taking into account the surface ship announcement that we made last week. Most certainly given that DCNS are the preferred tenderer and the designer with Australia of the new Australian Future Submarine, of course there’ll be engagement in France. But let’s temper the enthusiasm with a little bit of reality.

JOURNALIST:

Okay, I just want to switch to something else because today we learnt that your partner, Stuart Ayres, who is the New South Wales Minister for Trade, was last week in France and sought a meeting with DCNS which apparently did not go ahead. I want to know, did you try in any way to intervene to seek that meeting between Stuart Ayres and members of DCNS last week?

MINISTER PAYNE:

No, I understand that it is part of a series of meetings that any Trade Minister from Australia, from any State in the Commonwealth frankly, would endeavour to have with participants in the CEP process. As you’ve indicated, the meeting didn’t proceed. I understand from his statement due to times not merging with the appropriate program that he had, and finally I in no way approached Defence or engaged with Defence on this matter.

JOURNALIST:

Or anyone else in France or any other official to try to influence whether or not this meeting should go ahead?

MINISTER PAYNE:

No, and I think that clearly, certain individuals might be trying to make mischief but I am very happy to make those assurances.

JOURNALIST:

You understand that it is reasonable to ask the question given the coincidence of the New South Wales Trade Minister being in France in the same week as the National Security Committee of the Cabinet is discussing this very project and he is seeking a meeting with the tenderer who eventually wins the bid?

MINISTER PAYNE:

Well indeed, and as I’ve said, as part of the ongoing process for most Trade Ministers in the country, the assiduous efforts of the Germans, the Japanese, and the French to meet with all of them are on the record and declared right around the country and I would expect all of my colleagues, at State and Federal level, to make their best endeavours to ensure that Australia is shown in the best light in this CEP process. I am sure that is what they’ve done.

JOURNALIST:

And it is right to assume that New South Wales, like many other States, I suppose will be benefiting from this project?

MINISTER PAYNE:

Well, we have a long way to go in the design process but if my text message library is anything to go by, you can start with Tasmania, you can go up through Victoria, through New South Wales, through to Queensland, back around to Western Australia and the NT and the ACT, also have bids that they would like to see come to fruition as well for their involvement. This is truly going to be, a national endeavour or a national enterprise; whatever you would like to call it.

It is a seminal point in our ability to acquire key naval platforms that we need for Australia’s national security and the best possible ability for Navy to do the job that we ask them to do everyday of the week. The men and women of the RAN are going to be the beneficiaries of a re-generation of naval ability in this country that we haven’t seen since World War II.

JOURNALIST:

And finally, of the $50 billion, how much of that do you envisage will be spent in Australia?

MINISTER PAYNE:

The overwhelming majority but that is broken down across labour, it is broken down across design, it is broken down across acquisition?

JOURNALIST:

?Sorry to interrupt you, do you mean $30 billion, $40 billion?

MINISTER PAYNE:

So, we have to do a lot of the crunching that goes with an acquisition of this magnitude. That will be done in commercial terms as the design process plays out and as the contractual process plays out. So I am not going to put a number on that but what I can say with absolute confidence, is that the Prime Minister, the Industry Minister, and I have made completely clear, that as much as we can of every single dollar that is spent on defence capability in this country, is spent in Australia. That is our undertaking and one of which we will stand - in front of our Defence Industry Policy Statement, our Defence White Paper, and our Integrated Investment Program, which sets this out to provide certainty to industry - we will stand in front of all of those, and we will stand with the workers and we will stand with the businesses here that want to invest and want to engage and bring that to fruition.

JOURNALIST:

Minister, I appreciate the time you’ve taken to speak to Lateline tonight.

MINISTER PAYNE:

Thanks Emma.

ENDS

Media contacts:

Henry Budd (Minister Payne's office)             0429 531 143

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