Minister for Defence - Interview on Sky News with David Speers

Interview on Sky News with David Speers

Thursday, 28 April 2016

Subjects: Submarine tender, shipbuilding, relations with Japan, Manus Island asylum seekers

JOURNALIST:

Defence Minister, Marise Payne, thanks for joining us this evening. Can I start with a question to clear up some of the reporting this week on the premium Australia might be paying to build these submarines in Australia. Is there a premium, an additional cost, and what is it?

MINISTER PAYNE:

David, I think we’re at the very beginning of this process. We haven’t even begun the design in detail with DCNS, the French preferred tenderer – preferred designer. In fact, there is, in all of the assessment, there is potentially a premium. But what we have done, and the decision was made in August last year, was to start the establishment of the continuous naval shipbuilding industry. Now, we announced last week, particularly in relation to the surface ships, that that would kick off in Adelaide in 2018 with the commencement of the Offshore Patrol Vessels, moving to the Future Frigates by the time we were ready for that, and then the submarine build flows behind that, again.

That is very much apart of the restructuring of the industry which we were advised, the Government was advised, in particular by the Rand report, was required to essentially give us a continuous naval ship build, so we didn’t have “fits and starts”. It meant that shipyards didn’t have to start cold, reskill, retool, rebuild infrastructure or acquire new infrastructure and so on. That is going to make a very significant change to the costs of naval shipbuilding in Australia and I’m very pleased that the submarine announcement comes in, if you like, behind that to flow through into the long-term future for the industry in Australia.

JOURNALIST:

Okay, so, there is a premium, there though. Just getting back to this. I mean, are you able to quantify that? Is it the 15 per cent that some suggest, is it the 30 per cent that some have said?

MINISTER PAYNE:

I don’t think that we can do that at this stage and I don’t think it’s necessary to do that at this stage because, we have a lot of numbers to crunch. Just for starters. I mean, you can imagine the size of this project – in the vicinity of $50 billion – spread over multiple decades is a very, very significant one. And I think anybody who is trying, putting very fine points on numbers at this point in time is pretty ambitious about their own accounting accomplishments, I think.

JOURNALIST:

No, fair enough. But I appreciate it’s a valid goal to have a continuous build and keep the system flowing through all of these projects. But DCNS clearly preferred to have the first one or two submarines built in France and this could’ve meant that they are delivered cheaper and two years – up to two years earlier. Is that right?

MINISTER PAYNE:

Well, as you know, all of the participants of the Competitive Evaluation Process were invited and all complied with presenting builds across three particular options. The Government has made a decision in relation to the naval shipbuilding industry in Australia that this is our preferred outcome. We see this as one of the chances to make Australia–

JOURNALIST:

Does it mean a two-year delay before we get the first submarine in service?

MINISTER PAYNE:

I don’t think you can quantify that either. I think that we have a lot of work to do in relation to the design. We have to understand that what we’re dealing with here is one of the most important pieces – if not the most important piece – of capability that the Australian Defence Force will acquire in the near-to-medium future. It’s also the most complex piece of manmade equipment that exists.

So we have a lot of work to do in designing, we have a lot of work to do in crunching the numbers, we have a lot of work to do in up-skilling Australians, which is one of the most important parts about what we’re going to pursue with the Australian build of the submarines. We have a lot of work to do with our small-to-medium enterprises so that they can engage in the supply chain process. So that planning is going to be underway, it’s going to be part of our Naval Shipbuilding Strategy, which will be released later this year. I think that what we have to do in refining all of this is make sure that we have the best possible outcome we can for Australia in terms of cost, in terms of timeliness, and in terms of the capability itself.

JOURNALIST:

Alright lets – to that end on timeliness, can I ask you did the Department of Defence specifically recommend to the Government that all of the submarines, all twelve, be built here or did it also give an option to build the first one or two in France?

MINISTER PAYNE:

David, I’m not going to talk about the finer nature of the recommendations to the National Security Committee of Cabinet. It’s called the National Security Committee for a reason.

JOURNALIST:

But, with respect Minister, this is a pretty important aspect as to whether we’re delaying the arrival of these new, world-class submarines, as to whether the advice from Defence was to build them all here or not?

MINISTER PAYNE:

Well, with enormous respect David, I’m not going to go into the details of the National Security Committee’s deliberations. But what I will point you to is the outline?

JOURNALIST:

(talks over) Well your colleague Christopher Pyne, your colleague Christopher Pyne, sorry to interrupt?

MINISTER PAYNE:

–in the Defence White Paper in February of this year. The outline is set out, the builds are, the build process, the build timelines, and the commencement in operation of the submarines, and that is the timeline to which we are working.

JOURNALIST:

Your colleague Christopher Pyne did say yesterday, “I’m a member of the NSC and we received a recommendation from Defence, which was very clear, and that was the French bid was superior and that an all-Australian build with Australian steel, Australian jobs, and Australian subs was the recommendation from the Department of Defence” – is that right?

MINISTER PAYNE:

I said to you David, I’m not going to go into the details of the National Security Committee discussions or recommendations–

JOURNALIST:

–Well, he did–

MINISTER PAYNE:

–What we’ve made very clear is that we will be acquiring twelve, regionally superior Future Submarines for the Australian Defence Force for the defence of Australia in terms of protecting our national interests and our national security. Our regional superiority in coming decades, where we will see more than 50 per cent of the world’s submarines actually operating in this direct region, for the Australian Defence Force and our allies, these are very important acquisitions.

JOURNALIST:

Alright, so we don’t know if Defence actually recommended that all twelve be built in Australia but we do know that you are mandating Australian steel be used in these submarines. Can I ask you why?

MINISTER PAYNE:

Well, this is a great opportunity we have in this design process. Part of the process which we are looking at in terms of transforming the Australian economy into the economy of the 21^st Century is about making sure we play to our strengths – our strengths in innovation, our strengths in cutting edge scientific advances, making the sort of steel that you need to construct a piece of capability as technologically advanced as a submarine, is an amazing accomplishment for Australia.

JOURNALIST:

(talks over) But surely we should have the best steel for the best price that’s available anywhere in the world? Surely we should just have the best steel?

MINISTER PAYNE:

Well, I think we should also make sure that we maximise Australia’s opportunity and Australians opportunity for engagement here and, of course, export that as far as we possibly can as well.

JOURNALIST:

But surely then you could argue in the Army, the soldier’s boots and backpacks and weapons should be made in Australia as well. Where do you draw the line – is this protectionism for the steel industry?

MINISTER PAYNE:

If you have a close look at the Defence Industry Policy Statement, if you have a close look at the White Paper, we are completely resetting the relationship between Defence procurement and Australian industry. That involves maximising the engagement of Australian industry. We have established a Centre for Defence Industry Capability in Adelaide, which is all about making sure that not only is Defence able to say ‘this is what we need’, but the industry is able to say, ‘this is what we can do’.

I think a transformed economy needs those sorts of relationships; we need that sort of reset, we need to make our industry a fundamental input to capability in Defence. That’s the commitment which we’ve made and which we’ll prosecute through these acquisition processes.

JOURNALIST:

It’s not protectionism?

MINISTER PAYNE:

No, not at all. It’s about making sure that we have an economy which is at the cutting edge, we have industry which is at the cutting edge and the need, the scientific advances we can make in this particular space, the technological advances we can make as we design and develop our future capabilities across Defence are a core part of that.

I have been to the most extraordinary businesses around Australia. I have taken the Prime Minster, the Industry Minister to a couple of them as well, where we are really leading the way internationally in terms of what we can do with our Defence capability and we want to be able to say to as many small-to-medium enterprises across the country as want to participate: there is a place for you in that.

JOURNALIST:

Now let me ask you about Japan. Japan’s Foreign Minister says it is very disappointing they were not chosen and he says this project was the symbol of defence cooperation between Australia and Japan. Do you agree with some analysts who believe Japan has been humiliated after being led to believe by the Abbott Government that they were going to win this?

MINISTER PAYNE:

I think that any participant in a competitive process who is not successful is obviously entitled to be disappointed, of course they are. But what I have been, the Prime Minister and the Foreign Minister have been at great pains to emphasise is that Australia and Japan enjoy a very Special Strategic Partnership as it is known, which gives us a degree of bilateral cooperation not seen with a number of our other neighbours and partners around the world. That Special Strategic Partnership is one to which both we and Japan remain absolutely committed to growing and to deepening and also to extending our capacity to trilateral participation and engagement between Australia and Japan and the United States. I certainly made that very clear in my conversation with Defence Minister Nakatani and he reciprocated those views and that is a very, very important foundation for Japan and Australia going forward.

JOURNALIST:

To that end Australia, Japan, the United States all have a keen interest in what is going on in the South China Sea. What’s your view on whether Australia should conduct a Freedom of Navigation exercise in the South China Sea?

MINISTER PAYNE:

Well I’ve consistently said that I’m not going to engage in public conjecture about future activities of the ADF such as that. But I’ve also been very consistent in indicating we fundamentally believe in the application of the international rule of law in this context and that we retain the right – as should every other democratic, freedom-loving nation – retain the right to engage in freedom of navigation, freedom of overflight through the region as is appropriate. That is a core of how we operate.

JOURNALIST:

Fair enough. A couple of quick ones. With the submarine contract, the Future Frigates, the patrol boats, it would seem a pretty good time to put ASC – the Australian Submarine Corporation – on the market if the Government were so inclined. Is that something the Government is considering? It would fetch a pretty good price, you would think right now.

MINISTER PAYNE:

Well there’re a lot of considerations that have to be taken into account in relation to where we go from here in terms of the basics like infrastructure. We obviously have had relatively recently delivered to government, a Strategic Review into ASC and those matters will be considered in due course. But certainly as part of our Naval Shipbuilding Strategy we will be looking at exactly what we need, particularly in infrastructure and management terms, at ASC and the shipyards in Adelaide.

JOURNALIST:

Is that part of the contract negotiations with DCNS? Is that part of the structure of ASC?

MINISTER PAYNE:

Well I’m not going to talk about contract negotiations with the preferred designer.

JOURNALIST:

Well I can only try.

MINISTER PAYNE:

You can.

JOURNALIST:

Final one on a completely different subject; asylum seekers. You did indicate yesterday that the asylum seekers at Manus Island would be considered on a case-by-case basis. What were you referring to?

MINISTER PAYNE:

I think I was indicating that there were legal matters which certainly needed to be considered as a result of the decision of the court in Papua New Guinea. But what I also said, and what others of my colleagues have consistently said since the decision became known, is we are not in a position to and we are not intending to, change our current policy in any way. We have absolutely no intention of giving any indication to smugglers and to the criminals who operate across those waters that they have any opportunity to bring anyone here by boat. We must not ever, ever revert to what Labor allowed to happen to during their time in government and I absolutely stand by that position.

JOURNALIST:

I’ve got to remind everyone, back in 2005, I remember it well; you were one of five moderate Liberals who backed a private members bill to end the indefinite detention of women and children, put pressure on John Howard over the issue back then. Have you changed your view, have you moderated your view overall on this issue?

MINISTER PAYNE:

Well David, I think the difference between the Howard Government and what the Rudd and Gillard Governments allowed to happen was the Howard Government were clearly very, very effective managers in that context. We were able to achieve certain things in relation to the management of people who had come here unlawfully, and most importantly stop the boats, and that’s the difference.

JOURNALIST:

But in fairness you didn’t want indefinite detention lasting more than a year, I think it was, and we do have that now, don’t we, at Manus Island and Nauru?

MINISTER PAYNE:

Well we are dealing with the outcomes of the policy of previous Government and I think the Minister for Immigration Mr Dutton and his predecessor Mr Morrison have had to make some extremely difficult decisions, to make sure we were in a position to ensure, if you like, that we never reverted to Labor’s circumstances or policy and that is exactly what we are doing.

JOURNALIST:

Defence Minister Marise Payne, we have to leave it there. Thanks very much for joining us.

MINISTER PAYNE

Thank you very much, David.

ENDS

Media contacts:

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

Defence Media Operations                           (02) 6127 1999