Press conference - Osborne, South Australia

PETER MALINAUSKAS, PREMIER OF SOUTH AUSTRALIA: Welcome to Osborne in Port Adelaide, the home of naval shipbuilding here in Australia. I am exceptionally pleased to be here this morning with none other than the Minister for Defence and the Acting Prime Minister of the nation, Richard Marles.

Richard, we can't thank you enough as South Australians for the extraordinary amount of work that you put into this historic agreement that we'll talk to in a moment. It's also fantastic to be here again with the Minister for Foreign Affairs and a great South Australian Penny Wong. I know how important Penny's advocacy has been at every level, not just in government, but also through a sustained campaign in opposition to ensure that all the hopes and visions that so many South Australians have for this facility here at Osborne are realised. So it's great to be here with Penny.

Along with Pat Conroy, the Minister for Defence Industry. Pat's been assiduously working behind the scenes, I know, for many, many months. He was there speaking to that great detail yesterday. And Brendan O'Connor, whose commitment to employment across our nation and particularly skills is well known and will be essential in the path going forward around skills development here.

And, of course, Louise Miller-Frost, the member for Boothby, whose campaigning efforts were essential to Labour forming government at the most recent federal election. And naturally, you'll forgive me for particularly acknowledging Susan Close, Deputy Premier of South Australia, and also the Minister for Space and Defence Industries, who has been working tirelessly at the state government level to see to the realisation of the agreement that I've just signed with the Deputy Prime Minister today.

The Deputy Prime Minister will speak to that agreement in a bit of detail in a moment, but from the outset – today is a historic day for our state as we venture into an incredibly important period, not just in South Australia's path, but also the nation's path to national security, peace and prosperity. South Australia has a central role to play in contributing to our national effort to maintain the security of our region by providing the Commonwealth with the highest-end equipment that could possibly be procured anywhere in the world in the service of our Navy.

Vice Admiral Mead, along with the Deputy Prime Minister, yesterday announced the most substantial contribution to South Australian defence industry, in fact, the national defence industry, in our history. And South Australia is more than capable of meeting its end of the bargain. The South Australian state government stands fully committed to work with the Federal Government to ensure that this massive endeavour, this unprecedented enterprise of building nuclear submarines in South Australia, is done on time. We have the population and the history of naval shipbuilding in South Australia. What we've always needed is a continuous pipeline of work that allows businesses to invest in, but just as importantly, young people to make career decisions around, to ensure that we can deliver the workforce of tomorrow. And today's agreement speaks to the development of that workforce into the future.

The agreement we've just signed speaks to the Skills Academy. It speaks to the land transfer that will be required and also seeks to address other critical elements, including additional university places, all of which will be necessary and more to see to the nuclear submarines being built here in Osborne. The fact that the Commonwealth sees in South Australia the ability to build the most complex machines that have ever been produced in the history of humanity, I think says a lot about where South Australia is going. And we stand ready to do whatever is required to develop the workforce of tomorrow and make sure we step up to the plate and meet the nation's security's needs.

As we said yesterday, there is no longer a question about where the work is going to come from in South Australia. It's a question of how we develop the workforce to do the task at hand and meet the nation's requirements to deliver the most complex machines ever built in the history of the country in the service of the Royal Australian Navy. We're excited about that proposition. It's one that's been a long time coming. But now we can plan for the future in a more deliberate way than has ever been able to be provided for in the past. So I do want to thank you, in particular, Richard, and of course, the Prime Minister, for your commitment to South Australian industry, but more importantly, a commitment to ensuring that our Navy has all of the equipment that it requires to preserve the prosperity and peace of our region.

RICHARD MARLES, ACTING PRIME MINISTER: Well, thank you. And can I start by saying how much of a pleasure it is to be here at the Osborne Naval Shipyard, to be here with my good friend Peter Malinauskas, the Premier of South Australia. Premier; Deputy Premier; my Ministerial colleagues; Louise Miller-Frost, the member for Boothby and Vice Admiral Mead. It is fantastic to be here today.

Yesterday's announcement commits Australia to developing the capacity as quickly as possible to build nuclear-powered submarines here in South Australia, right here at Osborne. This is demanded of us by our international partners. This is a massive endeavour. It is of the same order of magnitude of the Snow River scheme in the 60s. It's going to transform our national economy, but it is going to transform the South Australian economy. Thousands of jobs are lifting up of the technological capability of the broader economy. What this will see across the three countries of the United States, the UK and Australia is the fourth production line to build nuclear-powered submarines, adding to Huntington's Electric Boat in the United States and BAE in the United Kingdom.

And as the Premier has said, this is going to be building the most complex machinery that is known to humanity, which will mean this site will become one of the centres of highest technology industry in the world. And it is absolutely a vote of confidence in Australian industry, but it's a vote of confidence in South Australian industry. You've just witnessed the Premier and I sign a Cooperation Agreement between the Commonwealth of Australia and the state of South Australia. The most important aspect of that is a headline commitment between our two governments to work cooperatively together to deliver this project. And that's really important because that's going to need to happen not just during the life of our governments, but across Commonwealth and South Australian governments over the coming decades. It is a profoundly important statement of intent because unless that is in place and unless that cooperation is enduring, we will not be able to deliver this capability for our nation. And we understand that as much as this will transform the South Australian economy, the nation is going to be reliant upon South Australia to deliver this capability to our country.

In the here and now, there are three important practical, initial steps in terms of that cooperation. The first is a commitment to an increase of 800 university places here in South Australia over the coming four years, in areas which are critical to the building of nuclear-powered submarines, particularly in areas of engineering and mathematics.

The second is the establishment of a training academy right here at Osborne, which will provide for apprentices and the trade level training which is so particular to the building of nuclear-powered submarines, and my colleague Minister O'Connor is going to speak more to that in a moment. And the third is a land exchange, which is going to provide South Australia with really important land at Keswick in urban Adelaide, land at Cultana, which is important in terms of the hydrogen project. But from the Defence point of view, is going to provide in exchange the land right here at Osborne necessary to put in place the construction yard which will ultimately build these submarines. And I want to emphasise that our intent is to build this capacity as soon as possible, which will see the construction of the yard happen immediately. And this land exchange today forms the beginning of that. This is happening right now.

I really want to commend the Premier on his engagement on this project. Peter knows absolutely how central is South Australia's cooperation from a national point of view in terms of delivering this capability to Australia. But I can also assure you that he is a fierce advocate on behalf of South Australia and wants to make sure that this is going to provide the benefit that it will inevitably do to the South Australian economy. And I think, I really want to say to everyone around the country, and particularly those here in South Australia, you can have the highest degree of confidence that the governments of South Australia and the Commonwealth are working as closely together as possible to deliver this generational project for our nation. Minister O'Connor.

BRENDAN O’CONNOR, MINISTER FOR SKILLS AND TRAINING: Thank you, Deputy Prime Minister. Can I say this is an important decision, first and foremost a national security decision. But it's also a decision that means many, many jobs for South Australians, for Western Australians and indeed for workers around the country. This is about ensuring that we have a capacity to provide a greater likelihood of stability and peace in our region. But to do so, we need to invest in skills in order to provide the capability and the capacity for the defence industry to produce these remarkable defence assets. And for that reason, there has to be not only a whole of government approach to this, but indeed working with other governments and indeed working with industry employers and unions to make sure we get this right.

Of course, there's no doubt that this decision will provide for South Australia a remarkable investment in the economy, a remarkable opportunity for workers to get into very high skilled, secure, long term employment. And that's the case too for those in Western Australia with the upgrade of HMAS Stirling, where we're going to see a very significant investment in that state as well. But I want to make it also very clear, very much like the automotive industry, there will be the efforts of other companies in other states that will be in a supply chain providing opportunities for those businesses too. Because this is a national effort of significant scale, as the Deputy Prime Minister made clear. Probably the most significant decision in the defence realm for many a decade. And for that reason, we need to be working very closely with state and territory governments who provide very much the vocational education training to be delivered to workers. We have to work very closely with universities in South Australia and beyond. And Minister Jason Clare, of course, is very much focussed on the need to supply skills from universities.

This is something that, of course, we'll be working across government, working with the Defence Minister, the Defence Industry Minister, and ensuring that we can get this right. It really does start today – a roundtable of South Australian industry representatives and other representatives that we're discussing the matters with today. The first, of course, investment and decision will be to commence the construction of the submarine construction yard, which of course amounts to thousands of construction jobs. So too in the upgrade of the HMAS Stirling in Western Australia, a very significant construction phase. And of course beyond that, there'll be jobs that will go on indefinitely as we continue to produce these remarkable, critical Defence assets.

So today is an important day, and this week is an important week, for the country in terms of national security. But it is also a magnificent opportunity for Australians to get very good jobs. For our manufacturing sector to become broader, deeper, in order to ensure that we can be a country that can stand on its own two feet. So this is about national security, but it's about economic security, it's about sovereign capability, not just in the areas of Defence. And for that reason it has multiplying benefits across the economy, across the country. And I'm very much looking forward to working with my Ministerial colleagues, both in the Federal Government and the state and territory governments, working with industry, employers and unions, to make sure we achieve this very important goal.

MARLES: Thank you, Minister. So happy to take questions. There might be questions of the day unrelated to this which I’m also happy to take, but we'll do them at the end and at that point I'll ask Vice Admiral Mead to leave. But are there questions that people have about the project?

REPORTER: Is there any time that the work on the Collins class will be wound up? And that there will be some kind of ‘valley of death’, or at least a short period, where workers will be out of work (inaudible)?

MARLES: No, that's really an important question and there's a very clear answer to that. We're very focussed on dealing with the capability gap that was left to us by the lost decade under the former Government, where we saw Australia be in and out of a deal with Japan, and then in and out of a deal with France. And so as we have been working on the Optimal Pathway of evolving our submarine capability from where we are today to the point that we are producing submarines right here at Osborne, capability gap and dealing with it has been central to that. Extending the life of Collins is a critical part of that. And so that will absolutely see that happening into the build of the future submarines.

REPORTER: What’s some of the first work that we’re going to see on the construction yard in terms of this exchange of land?

MARLES: Well, so, the starting point here is the construction of the yard and that really happens immediately, which is why this land exchange is so important to be able to facilitate access to the land immediately. One of the things that's become very apparent for me as we've been walking along this journey is just how significant is the requirement for Australia to be a nuclear steward in terms of managing our nuclear enterprise in the safest possible way. That requires buildings and security around here of a different order of magnitude than we would have seen before. So we are very focussed on doing that, getting access to the land straight away. And as we've said, the construction of the submarines themselves will happen before the end of this decade.

REPORTER: So in terms of the land size, are we talking double in size from what it is now?

MARLES: You're committing me to specifics– it is a significant expansion of land but I can come back to you and give you the precise–

REPORTER: Where is the land? Is it the land across the road? Or is it–

MARLES: We can supply you with maps as to where the land will be.

REPORTER: After years of delays, and significant changes to the submarine project, how can people be confident that this time it will be different?

MARLES: Fair question. Our national interest demands that we do this. We live in the most strategically complex and threatening period that we have since the end of the Second World War. And we have to take the step of developing the capability to operate a nuclear-powered submarine so that we can hand over a much more self-reliant nation to our children and to our grandchildren and to make sure that we keep the country safe. Our strategic circumstances demand that we walk down this path. That's the first one. In order to do that, we simply have to, as a nation, make a contribution to the net industrial base of the three countries of the United States, the United Kingdom and Australia. We would not be able to do this from the point of view of the United States and the United Kingdom unless we are making that contribution to the net industrial base. So we must do this here. We must develop an industrial capability here. We have to develop the fourth production line here, across the three countries, in order to achieve what we need to achieve in developing this capacity. And our strategic circumstances demand that we develop that capacity. Now, I understand what South Australians have gone through. To be honest a lot of this, the proof is going to be in the pudding. But the strategic circumstances demand that we do this and we are completely committed to achieving it.

PENNY WONG, MINISTER FOR FOREIGN AFFAIRS: I'll just add to that, if I may, thanks. Just where Richard, the Deputy Prime Minister, left off. I've been coming down here for many years. I think Staz has probably been here a few times with me, maybe some of the camos as well. And each time we've been down here with workers, with industry, with the community, demanding local jobs, demanding certainty. No government has done what this Government is doing. No government has not only set out an Optimal Pathway for decades, but no government has come down here and recognise that we need the partnership between federal, state, the academic sector, the tertiary sector, the training sector, to deliver the workforce. And I said yesterday in the press conference with the Premier and the Deputy Premier, this investment is like– will do for South Australia what the car industry did, but much more. It will change the nature of our economy. We know that key to that is workforce and skills. That's something no government has had a plan for. We have a plan and we are committed to delivering it.

REPORTER: In terms of security, what does it pose to Osborne? Given the fact you mentioned we live in a threatening world at the moment, does it place a target on Osborne?  

MARLES: Developing this capability for our nation will make our nation more safe. That's what people need to understand. Developing this capacity for Australia will have us be taken more seriously around the world. But at the heart of our strategic intent is to contribute to the collective security of our region. Because Australia's defence doesn't mean that much unless there is a collective security within our region. And it's our contribution to maintaining the global rules-based order and particularly within our region. Doing what we are doing here at Osborne makes this country much safer.

REPORTER: Minister, are you confident that future federal governments will have both the political will and the money to keep spending money on the partnership that Senator Wong has referred to? To maintain this commitment?

MARLES: Look, I am. And again, it's an important question. I mean, this is a multi-decade project across three countries and what's really important is that there is a bipartisan commitment to this in all three countries. And I believe that that exists here in Australia, it exists in the United Kingdom and I think it exists as well across the entire spectrum of politics in the United States. So I am confident about that. But it comes back to the answer that I gave before. The strategic circumstances that we face as a nation are going to demand it. And ultimately, what we're talking about is an expense over the course of this project of 0.15% of GDP in a context where right now we spend 2% of GDP on Defence, growing to 2.2%. And when you think about the transformation this will give to our Defence Force, the dramatic increase in the potency of our Defence Force, this is the most important value for money spend that we will do within the Defence portfolio.

REPORTER: How much money in the Defence Budget are you going to have to find to pay for these submarines?

MARLES: Well, we have been very upfront about the fact that the Defence Budget is going to need to grow over the medium to long-term. We've made a really important statement that over the Forward Estimates, over the next four years, Defence will cover the costs associated with this program. That's a really big statement, I think, to Government and to the nation in general, that Defence is going to play its part in terms of facilitating the cost of this. And we'll have more to say about that in the lead up to the Budget in May and with the announcement of the Defence Strategic Review in April. So there are measures that we can take. But we've been completely clear about the fact that a growing Defence Budget is one of the pressures on the federal Budget and that's what's driving the big decisions that we're making. In our first Budget, we returned 99% of the revenue upgrades to the Budget. No one does that. But we've done it because we understand how important it is to have sensible fiscal management given the pressures on the Budget and also given that we inherited a trillion dollars of debt from the former Coalition Government.

REPORTER: What do you say to calls for China to build anti-submarine planes and shipborne missiles as a response to AUKUS?

MARLES: We are making this decision in Australia's national interest and our national interest demands, as I have said, that we make our contribution to the collective security of our region and the maintenance of the global rules-based order. That is at the heart of our strategic intent. But we do it within a landscape, within a strategic landscape, where within our region we have witnessed the single biggest conventional military build-up anywhere in the world since the end of the Second World War. Now, to not respond to that and to not think about the Nation's interests in the light of that is to be condemned by history. So that is the way in which we are going about the decisions that we are making. And we are making those decisions solely through the lens of Australia's national interest and solely through the prism of the collective security of our region and the maintenance of the global rules-based order, which is so important to our country.

REPORTER: When was the decision to store high-level nuclear waste domestically made? And was it something you, or the Prime Minister, knew when you came to Government?

MARLES: This is a decision that we made through the course of our negotiations with the United States and the United Kingdom, but importantly in the context of our dialogue with the International Atomic Energy Agency. Because we made clear at the outset, indeed, when we were in Opposition, we made clear that a precondition for the Government to walk down this path was ensuring that Australia maintained its obligations under the Non-proliferation Treaty. Now, what that means is that we need to be providing an assurance to the IAEA and to the global community about every piece of nuclear material throughout the lifecycle of that nuclear material, and that includes the disposal of it. There are a range of options that were considered, but where we've ultimately decided, or landed as three countries, is that Australia will take responsibility for this. It is a big decision. I don't want to play it down. But to be clear, the first of the reactors that we will need to dispose of will be in the mid-2050s. So we've got time to prepare for this. But it is a very big decision. It's going to require the building of a facility in order to do this. And as we've said, we've made the commitment that that facility will be on Defence land.

REPORTER: How would you describe Russia's conduct, the downing of the US drone (inaudible)?

MARLES: Obviously I'm aware of the reports this morning. To be clear, I don't have any information that's not in in the public domain. But the American drone was operating in international airspace in accordance with international law. We see interactions between militaries in international airspace, on the high seas, but there's an expectation that those interactions will occur in a professional way. And what's clear here is that Russia has not acted in a professional way and that has resulted in the downing of this drone. Once again, this is an example of Russia not playing by the rules. And that's actually at the heart of what's happening in the conflict in Ukraine. What Russia has done in the invasion in Ukraine is a complete flouting of the United Nations Charter and a complete disregard for the global rules-based order. And the event that we've seen overnight is just another example of that. And Russia has much explaining to do.

REPORTER: What level of Australian content will be (inaudible)?

MARLES: We will be working on those issues as we determine the build strategy over the course of the next 18 months. But I do want to make this point in response to that question: this is going to be a little bit different as we see a production line in Great Britain and a production line here in Australia. There are actually going to be real opportunities for Australian companies, for South Australian companies to be contributing to the supply chain of the build of the submarines in Great Britain and even submarines in the United States. So when we think about Australian industry content, it's an important thing to be considered in the context of our own submarines. But we will be also thinking about it in terms of the Australian industry content of what is built in the United Kingdom and also the United States.

REPORTER: Can I just ask, it was 60% under the French submarine contract. Will it be less than that for the AUKUS contract?

MARLES: Well, as I say, we'll be working–

REPORTER: So you can’t guarantee it will be 60%?

MARLES: We’ll be working through all of those through all those details as we determine the build strategy over the course of the next 18 months. But I reiterate, it won't just be about the Australian industry content of the submarines that ultimately roll off the line here at Osborne. We are going to be very focussed on the Australian industry content of submarines that roll off the line in Barrow, and indeed, submarines that are being built in the United States as well.

PAT CONROY, MINISTER FOR DEFENCE INDUSTRY: Just further to that question, we need to put this in context. This project will create around 20,000 jobs and importantly, in the dockyard right here, this project will deliver around twice as many jobs as the Attack class project would have delivered. So it's really important to have that context. 20,000 jobs nationwide, 8,000 jobs on building and sustaining the platform, 5,500 jobs building the submarine itself. Twice as many as would have been delivered under the cancelled French Attack class.

REPORTER: (inaudible) just in regards to China saying this is like an ‘underwater arms race’. Can we win that race?

WONG: I think we've had the last question, but look, can I go back to what the DPM said. Australia's intent in acquiring this capability is to contribute to a stable, peaceful and prosperous region. We've spoken at length to our partners. They understand that's our intention. In terms of escalation, we always say we would encourage the great powers to manage their competition wisely and we welcome President Biden putting that on the table with China. We’d urge China to take that up. Thank you very much.

ENDS