Television interview, Sky News First Edition

SUBJECTS: AUKUS; Downing of US drone.

PETER STEFANOVIC, HOST: Let’s go to the Defence Minister, Richard Marles now. Minister, good to see you.

So, first of all, not unexpected that we've had reaction from China overnight. It says AUKUS subs are embarking on a, “path of danger and error”. China, as we know, is a nuclear power with its own nuclear subs. So is it hypocritical?

RICHARD MARLES, ACTING PRIME MINISTER: Well, look, I'll let China speak for itself and obviously it will do that. I mean, our focus is in relation to Australia’s security and Australia's national interest. And we see the defence of Australia very much rooted in the collective security of the region in which we live, and in the maintenance of the global rules-based order. And we are acquiring this capability so that we can make our contribution to both of those things. And we've engaged in a very significant diplomatic effort over the last few months, but particularly over the last week, to explain to the region and to the world why we're doing this and exactly what we're doing. And I'm confident about the conversations we've had, and I'm confident that there is an understanding within the region about why we've taken this step.

STEFANOVIC: Okay. If China reclaims Taiwan, or tries to, are we now locked into war with the US?

MARLES: Well, I don't want to speculate about prospects in relation to Taiwan, other than to say whatever plays out in the future in respect of that is something that we need to consider on its own terms. I mean, that really is a separate issue to what we are talking about now –

STEFANOVIC: But the Americans are giving us quite a leg up here when it comes to the Virginia class subs. Is there something that needs to be done in return if something happens over Taiwan?

MARLES: Well, we're working really closely with America and it is a very significant step that America and Britain are taking in providing us with this capability. But what this is about is enabling Australia to play its part in making its contribution to the collective security of the region and to the maintenance of a global rules-based order. Now, that's very much in Australia's national interest, I think America and Britain see that as being in their interest as well, and that's as far as it goes. That's why we are doing what we are doing. And we're seeing this very much as a long-term positioning of Australia to give effect to what is a very different strategic posture that we're going to need to have going forward, one which does enable us as a country to project, and that's the basis on it. Any conversations about the future of Taiwan really are a separate issue in respect of their own terms. And we've been speaking about Taiwan over the course of the last year, but it really is a separate issue to this.

STEFANOVIC: Russia has taken out an American drone overnight, Minister. Given Russia's close relationship with China, is that AUKUS related at all?

MARLES: I would imagine that's pretty unlikely. I mean, I've seen the reports in this morning's media, I'm not privy to any information that's not in the public domain. It sounds, from the reports, firstly, like the American drone was operating lawfully within international airspace, and that when the Russians intercepted it, they did it in an unprofessional way, which caused the downing of that drone. And again, I think this is an example – or another example – of Russia not playing by the rules. And ultimately, actually, that's what really underpins what's at issue in Ukraine in the first place, which is this is a gross violation of the UN Charter and the global rules-based order as a big power seeks to impose itself on a smaller neighbour, not by reference to the rule of law. And I think what we are seeing overnight is just another example of that, and Russia has clearly got some explaining to do.

STEFANOVIC: Okay. Now, back to AUKUS, it was Morrison's baby, but your Government certainly deserves credit for getting it to where it is. The expense, as we all know now, eyewatering but necessary. But for the critics, Minister, how do you reconcile the cost with those now forced into household austerity?

MARLES: Well, what underpins everything that we are able to do as a government, but obviously as a nation, is the security of our country and the security of our people, that comes first. All the social programs that we put in place in health and education or the welfare programs which are really important to provide, all happen on a foundation of living in a nation which is secure. And it's obviously difficult when you line up any given defence spend against any social program, but it is really important to understand that we can't do any of that unless we live within a secure country. Now, in a rational world, what you spend on defence is a function of the strategic threat, the strategic complexity that the country faces. And right now we face a lot of strategic complexity and a lot of strategic threat. And I can assure you that as a government, we are rational people. You can extrapolate a whole lot of government expenditure through to the mid 2050s, which is where these large numbers come from, and you will get big numbers. But the way to think about this is this is 0.15 per cent of GDP being spent on the submarines against the defence budget, which right now is at 2 per cent of GDP and is going to grow to 2.2 per cent of GDP. But for that 0.15 per cent we completely transform the capability of the ADF.

STEFANOVIC: So what will you be taking out of the defence program now to make way for the subs?

MARLES: Well, the Defence Strategic Review has been underway and we've wanted that to be a process which happens concurrently with the decision in relation to subs. Because as we think about the strategic posture that we need to have and therefore what equipment we need to give effect to that, it only makes sense to be considering both at the same time. We will be announcing the Defence Strategic Review in a month's time. There are some opportunities for savings within it. I mean, I want to also make clear there are other things we need to do as well that the Defence Strategic Review will outline. And so we will give answers to those questions in the lead up to the Budget and beyond. But it is an important statement, the fact that we are able to cover this over the Forward Estimates that Defence is playing its part in making these capabilities affordable. Although we have been making clear that when you consider Defence over the medium to long-term, this is a budget that will grow.

STEFANOVIC: Okay. Defence Minister Richard Marles, appreciate your time. Thank you. We'll talk to you soon.

ENDS