Minister for Defence - Interview on ABC Radio National Drive with Patricia Karvelas

Interview on ABC Radio National Drive with Patricia Karvelas

Tuesday, 27 April 2016

Subjects: Submarine tender, Adelaide workers, relations with Japan

JOURNALIST:

Today the curtain has finally been pulled back to reveal the architect of Australia's most expensive defence project, ever. French firm DCNS beat rivals from Japan and Germany for the contract to build Australia's next fleet of 12 submarines, at a cost of $50 billion. The Federal Government says the subs will all be built in Adelaide but what exactly does that mean? And how will France's win be viewed by Australia's allies, including Japan? Marise Payne is the Minister for Defence. Welcome back to RN Drive.

MINISTER PAYNE:

Great to be here.

JOURNALIST

I realise there is a lot of detail that still needs to be negotiated. But what does that actually mean? How is DCNS building the submarines with Australian expertise? Will they be built by French workers or Australian workers? What will be the carve up?

MINISTER PAYNE:

Well, they will be overwhelmingly built by Australian workers in South Australia at the shipyard I visited with the Prime Minister and a number of my parliamentary colleagues today. DCNS is selected as our preferred international partner for the design of the 12 Future Submarines. Obviously we need to engage in the appropriate commercial negotiations and discussions on that matter but we expect with the completion of those that design will be able to commence this year.

JOURNALIST

Will the components come from Australian companies or overseas companies?

MINISTER PAYNE:

So there are a number of things and I think a good example is the combat system and the weapon in particular, which are already the subject of a limited tender process between Raytheon and Lockheed Martin in relation to combat system integration. Those sorts of things are things we do in conjunction with the United States, most particularly as our closest ally and a country with whom we share very close ties on this sorts of technology. That was part though and very much a publicly open process with respect to the Competitive Evaluation Process with which we have just completed. So while we knuckle down and start the very, very serious design work, what we are very confidently able to say that this is an Australian build, this is about Australian jobs, it’s about Australian steel and it’s about developing a continuous naval shipbuilding industry in this country which has not happened before.

JOURNAIST:

So, Malcolm Turnbull said today that 2800 direct jobs would be created but it’s still really unclear though isn’t it? I feel like I have got more clarity about how many will be French imports.

MINISTER PAYNE:

So our assessment in relation jobs is 1100 or there abouts in direct shipbuilding jobs in the naval yard, if you like, and around 1700 jobs in the supply chain process. So as you can imagine with the complexity of a build like this means there will be very large numbers of businesses, enterprises across Australia involved, particularly in South Australia which has developed particular expertise in this area. Our Centre for Defence Industry Capability, which we announced would be based in Adelaide just a short time ago with the Prime Minister and Minister for Industry, that will be part of making sure that small to medium sized enterprises in this country, in this particular procurement and in others of course, are very much part of that process.

Each of the CEP participants, so DCNS as well, was asked to produce an Australian industry involvement plan and my feedback today, even just today, at the most senior levels of Government, was that DCNS had worked very assiduously on doing that and really got it in terms of what Australia was after.

JOURNALIST:

Your catch cry today was ‘Australian built. Australian jobs. Australian steel.’ But you can’t guarantee how much Australian steel will be used can you until you have the designs?

MINISTER PAYNE:

Well that’s right, we have to go through a design process. Of course we do and as we go through that process we will be working with Australian suppliers and seeking their input in fact, to ensure we are to get to a point where we have a capacity for that production in Australia.

JOURNALIST:

Will you mandate how much Australian steel? Is it 100 per cent Australian steel?

MINISTER PAYNE:

Well, I think this is a design process and we have committed, in relation to our naval surface ship announcements that were made last week again by the Prime Minister and myself, that they will be Australian steel-builds for the Offshore Patrol Vessels and the Future Frigates. Similarly we say that we want to work with Australian steel producers to make sure that we have the same capacity for the Future Submarines.

There are enormous opportunities for Australian business here. It is a very, very important project. One though, that I must say, is principally about the sort of capability that we need to make sure that we are protecting Australia’s national security and that we have the regionally superior submarine that we set out to achieve when we commenced the CEP process.

JOURNALIST:

On RN Drive my guest is Senator Marise Payne. She is the Minister for Defence and our number here if you want to join the conversation – what do you make of today’s very big announcement? 0418 226 576. Big because $50 billion is no small amount of money. The announcement has been criticised as protectionist, as corporate welfare. The Centre for Independent Studies says, and I quote, “Australia will have to spend tens of billions more to build these subs in Australia out of Australian steel. This is a waste of taxpayer money.” It’s true isn’t it that the value for money was not the top consideration – it was the jobs and, some people would say in a political climate, securing seats in an election campaign was the top priority?

MINISTER PAYNE:

Well, let me be very clear about what the first priority is in acquiring any sort of Defence capability but most particularly submarine capability for Navy; today's announcement is all about capability. National security has been, as I said in Adelaide today, has been the absolute driver of this decision. It is a natural progression or a natural extension of our Force Structure Review, of our 2016 Defence White Paper. It most importantly reflects the fact that, as a maritime-based trading nation, both our national and economic security are linked to the maritime environment in our region. So a lot of work, a lot of preparatory work, particularly through the Force Structure Review and the Defence White Paper, has been put into preparing for this acquisition. The Competitive Evaluation Process was assiduous in its focus on our capability requirements and I think that is the most important priority to which we are responding.

JOURNALIST:

There are some implications though for some of our other relationships. National security risks involved with this choice too may cause issues with some of our most strategic relationships. Japan is very unhappy, very clearly they feel they are missing out. Their Defence Minister has told Reuters that the decision was "deeply regrettable, we will ask Australia why they didn't pick our design".  What will you be saying to your Japanese counterpart? Have you talked yet?

MINISTER PAYNE:

We have indeed and we've discussed and reinforced between ourselves and, as has the Prime Minister and Prime Minister Abe, the fundamental importance for the special strategic partnership that we have with Japan—that is something which is growing and deepening and also enables us to engage in very important trilateral cooperation with Japan and the United States. We've absolutely affirmed our extremely strong commitment to that in our discussions today.

I think it’s also important to note, and both the Prime Minister and I made mention of this in our presentations this afternoon, that the submissions which we received from the three participants in the CEP were very impressive, were very capable and certainly the sort of material that you would expect from highly capable and well supported nations in terms of their own Defence ability. Though, ultimately, we were required to make a decision and the very strong advice that we received through the Competitive Evaluation Process from the Department of Defence and its Senior Officials was that the outcome of the CEP was that the best answer for our unique needs for a submarine was, in fact, DCNS.

JOURNALIST:

Do you accept that Japan’s disappointment is heightened because Tony Abbott as Prime Minister gave Japan a legitimate expectation that they’d receive the work? It was very clear.

MINISTER PAYNE:

Well, as you know, I wasn’t part of the process at that point in time. But, what we have made very clear, continually since I have had an opportunity to speak in relation to the Competitive Evaluation Process in recent months is that this was a very strongly supervised and established process that enabled all participants to present their best endeavours and, as I said, they were all very, very impressive. But ultimately we had to make a decision that best reflected our need for a regionally superior submarine, that best reflected our capability requirements, and that advice ultimately was for DCNS.

JOURNALIST:

And in terms of strategy closer to home, is this announcement enough to save Christopher Pyne in the Seat of Sturt and Andrew Southcott – well he’s not recontesting his Seat – but Boothby?

MINISTER PAYNE:

Well, as the Prime Minister has said, we’ll leave those observations to political commentators like such as yourself Patricia.

JOURNALIST:

Okay, well I reckon it might help. Thank you for joining us tonight Marise Payne. Really appreciate it.

MINISTER PAYNE:

Thanks for your time.

ENDS

Media contacts:

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

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