Minister for Defence - Interview on 666 ABC Canberra with Michael Brissenden

Interview on 666 ABC Canberra with Michael Brissenden

Tuesday, 27 April 2016

Subjects: Submarine tender, Adelaide shipyards, relations with Japan

JOURNALIST:

For more on the submarines decision I'm joined live on the line now by the Defence Minister Marise Payne. Senator Payne, good morning.

MINISTER PAYNE:

Good morning Michael.

JOURNALIST:

So, the Prime Minister has said there's a premium to be paid for building a new fleet of submarines in Australia rather than overseas. According to RAND Corporation study that premium is 30 to 40 per cent of the price. That's about $20 billion. How can you justify that?

MINISTER PAYNE:

Well, I think we've got a long way to go in terms of crunching the numbers before we get anywhere near to that point. In order to be able to assess that point, and I would also say that what that doesn't take into account is the benefits of the continuous naval shipbuilding plan which the Government is implementing was announced in August of last year that that was the Government's intention. What we've been able to do with the announcements of the Offshore Patrol Vessels and the Future Frigates in the last week and the Future Submarines yesterday is to really cement in place our capacity to develop a continuous naval shipbuilding industry which removes a significant amount of expense that was related to the fits and starts process, if you like, or boom and bust some people would call it, of projects by project shipbuilding. So every time you came to a new build you started cold, you started needing to acquire workers and skills and build infrastructure or upgrade infrastructure again. The purpose of a continuous naval shipbuild is to avoid that added cost and to streamline that process.

JOURNALIST:

Okay, but does this deal with what's called the so-called valley of death, the gap between the shipbuilding contracts, because there is still a gap isn't there for a couple of years?

MINISTER PAYNE:

It goes some way to doing that but to be absolutely frank, and I said this before; everybody knows, everyone involved in the industry knows and those people who are honest. The political process knows that there needed to be audit waste in the last term of the previous government before—to avoid that completely. Now, that not having been done we made a decision to establish a continuous naval shipbuilding industry to ameliorate that as far as possible and to address that gap as far as possible.

JOURNALIST:

Okay, well let's deal with this announcement specifically. A $50 billion figure. As we know Defence acquisitions are notorious for cost blowouts, can you guarantee that figure won't increase?

MINISTER PAYNE:

Well, this is going to be a very closely managed process. We're already speaking with the French in relation to accountability and transparency in relation to costs. We will begin the contractual negotiations, the commercial negotiations that will always go with the contract of this size and that will be obviously a considerable part of that process. So we are at the beginning Michael, we are starting with design in 2016 and given that this is the most complex piece of manmade machinery on the planet these days, that will take some time. But part of that will be managing that cost process and we will be paying very close attention to doing that.

JOURNALIST:

As you heard in the previous piece I'm sure there's no denying—I don't think anybody would deny that this announcement will help your electoral chances in South Australia, but it's a pretty expensive way to do it isn't it?

MINISTER PAYNE:

Well, as both the Prime Minister and I have said we'll leave commentary of that nature to the political commentators such as yourself I think.

JOURNALIST:

Okay, but it will help you won't it?

MINISTER PAYNE:

Well, it's a very good announcement for the entire country and a very good announcement for the workers in the Adelaide shipyards, for Defence industry in South Australia and across the nation because the chance to engage in a supply chain process for small to medium enterprises in this country, to be part of a cutting edge technology and the innovation of our science agenda that we have been talking about is just enormous. So it is a very good announcement and very positive announcement.

JOURNALIST:

You've made, obviously you've made a decision on this for all sorts of reasons but partly to keep the industry alive here in Australia. But we don't make those decisions, we haven't made those decisions on other industries in South Australia such as the motor vehicle industry for instance have we?

MINISTER PAYNE:

Well, this is a Defence decision and a capability decision first and foremost. This is about ensuring that we have a regionally superior submarine, but most importantly that we have the sovereign ability to build and sustain these ships ourselves, key now, investing in the intellectual capital here in Australia to make sure that the benefit is derived here in Australia. That is one of the absolute fundamentals underpinning the capacity to acquire this capability, this regionally superior submarine, and to do it here and keep those skills, keep that intellectual property, if you like, but also intellectual capital here in Australia.

JOURNALIST:

Well, we don't do that with the fighter jets. We're spending $25 billion on the Joint Strike Fighter. Why are subs any different?

MINISTER PAYNE:

Well, they're very different actually and if you think about them they are profoundly different pieces of capability...

JOURNALIST:

Well, I know but the principle itself isn't that different is it?

MINISTER PAYNE:

It's very different Michael. There are certain capacities that we have for construction and build as a Defence capability in Australia. One of those traditionally has been ship making and we have made a determination, the Government, that we can establish a continuous naval shipbuilding industry to address our needs with regard to the Offshore Patrol Vessels, the Future Frigate, the Future Submarines, and make a real difference for Australian industry in that way. Quite differently the United States is highly skilled in the making of fighter jets Michael, there're very, very different platforms.

JOURNALIST:

The Japanese government says the decision to select the French model was deeply regrettable and it will be asking Australia to explain why they didn't pick our design. Have you done that?

MINISTER PAYNE:

Both the Prime Minister and I have spoken to Prime Minister Abe and to Defence Minister Nakatani and in our public remarks, in fact privately but in our public remarks importantly we acknowledged the impressive level of all of the bids and the very complex nature and comprehensive nature of those. In relation to Japan I must say this in no way detracts from our absolute commitment to the special strategic partnership that we have with Japan that enables very extensive bilateral cooperation, which will continue and in fact grow, and we will also be continuing to pursue our trilateral engagement with Japan and United States. Both Minister Nakatani and I have acknowledged the fundamental importance of that to our relationship and I'm very confident that we will continue to grow and deepen those engagements.

JOURNALIST:

Okay. Marise Payne, thanks for joining us.

MINISTER PAYNE:

Thanks very much Michael.

ENDS

Media contacts:

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

Defence Media (02) 6127 1999