Radio interview, ABC RN Breakfast

SUBJECTS: Defence Strategic Review, JobSeeker.

PATRICIA KARVELAS, HOST: The Federal Government is billing its Defence Strategic Review as the most ambitious review of Australia’s military structure since the Second World War. And there’s no doubt the security challenges we face are urgent. But, ambitions aside, does the level of spending and the timeframes outlined in the Strategic Review match the urgency of the threats we face?

I spoke to the Defence Minister and Deputy Prime Minister, Richard Marles, a short time ago.

RICHARD MARLES, DEPUTY PRIME MINISTER: Good morning, Patricia. How are you?

KARVELAS: Good, thank you. The May Budget will earmark more than $4 billion to acquire long-range missile strike systems and manufacture guided weapons. But this isn’t new money, it comes from cuts. When will those missiles be ready for use?

MARLES: Well, it’s certainly new money when it comes to what we’re investing in both building a guided weapons enterprise in this country and also the purchasing of a long-range strike capability for our Army. I mean, we’ve had a lot of rhetoric around this over the past decade, a lot of promises, but, really, there hasn’t been much money put behind guided weapons, and we need that to actually see a manufacturing capability in Australia. We’re confident that with today’s announcement, coming out of the announcement of the Defence Strategic Review on Monday, that we will be able to see the beginning of manufacturing within this country within the next couple of years and that in terms of the purchase of long-range strike missiles we will have, you know, a very significant capability again within the next two years.

KARVELAS: You say it is new money, but it’s not – it does come from reallocation of funds. Can you just clarify that?

MARLES: Well, we are reallocating funds from –

KARVELAS: Well, that’s not new money, then.

MARLES: Well, it is in respect of guided weapons. I mean, what we did on Monday was to reallocate money from certain areas of Defence into others because what we’re seeking to do is reshape the Defence Force, and we’re looking at giving the Defence Force a much greater capability in terms of projection, and long-range strike when it comes to missiles is an example of that, a very important example of that. But in the space of missiles and having a manufacturing capability in this country it’s absolutely new money. I mean, within the Forward Estimates before this announcement there was about $1 billion dollars being provided over four years in respect of a guided weapons manufacturing capability. That was not going to be enough to get it off the ground. We’re now turning that into $2.5 billion. That’s a significant increase, and it's a complete game changer in being able to have a capability to manufacture guided weapons in this country.

KARVELAS: Minister, will the options be developed for this program by the department, manufacturers or will there be an independent process?

MARLES: No, this is working with manufacturers through the Defence Department. I mean, there’s been an ongoing conversation with key manufacturers, companies like Raytheon and Lockheed, who are the two large manufacturers of missiles in the world, about the establishment of production facilities within Australia. But, as I say, having these resources now at hand completely changes that conversation and we are confident it will enable us to bring forward a manufacturing capability in Australia much sooner. But that will involve a discussion with both of them, obviously with local manufacturers as well. Kongsberg, which is a Norwegian manufacturer of a range of missiles, including the Naval Strike Missile that we’ve just purchased, we’re also talking to. All of this gives rise to a really encouraging prospect of having a domestic manufacturer of these missiles soon. And the significance of that –

KARVELAS: Can you define ‘soon’?

MARLES: Well, as I said, in the next –

KARVELAS: couple of years, but when?

MARLES: Well, what we’re trying to do is to make sure that happens in the next couple of years. But the point I wanted to make, Patricia, is that what we’ve really seen in the war in Ukraine is the worldwide shortage of missiles amongst our friends and allies has been made clear. And for us to acquire this capability for our country going into the next five-10 years, we are simply going to have to develop an industrial base in this country which can contribute to the manufacturing of guided weapons. And now this will happen.

KARVELAS: Okay. Minister, I want to zoom out, if we can, and there’s been a lot of discussion about this huge ambition in this defence paper and how much it will cost. Now, you’ve conceded that this will have to be a bigger trajectory of spending. We’ve got spending at about two per cent of Gross Domestic Product and you’ve said that it’s your expectation that it will rise. You’ve been criticised for not being clear enough, ‘expectation’ has really been read into, so I want you to clarify if you can: is this an iron-clad guarantee, and what percentage of GDP do we need to move to, and will you guarantee it?

MARLES: Well, defence spending will rise above the trajectory that we inherited from the former government over the next 10 years. That will happen. That’s the one thing that I can completely tell you –

KARVELAS: Above 2 per cent?

MARLES: Well, yeah. The existing trajectory – as you say, spending is at about 2 per cent now. There is an existing increase in defence expenditure which we inherited from the former government and which we’ve consistently committed to. And what we are saying is that we will need to spend more than that. So the honest answer to the question is that how much we will spend over the course of the decade will be a function of, you know, a series of iterative decisions that get made in Budgets between now and then and National Defence Strategies between now and then.

KARVELAS: So are we talking in the range of 2.5 to 3 per cent? Can you actually quantify that for me?

MARLES: Well, I’m not going to walk down the path of putting a GDP percentage figure on it, and no-one really could. What I can tell you is that we are going to be spending more. And over the Forward Estimates we are precise – we’ll be spending $19 billion on implementing the DSR over the next four years. So we can give you precision in the short term, which is what you would expect. We can tell you that over the longer term it is clear to us that we will need to be spending more money on defence beyond –

KARVELAS: And guaranteed to be beyond 2 per cent? Guaranteed?

MARLES: It will definitely be beyond 2 per cent. We’re at 2 per cent now, and the funding trajectory that we inherited already goes beyond that. And what we’re saying is we will need more than that. And we’ve made clear what our focus is in terms of the areas that we will be pursuing, and we will pursue them. And ultimately we’re going to do that in the most fiscally responsible way, but they will cost what they cost.

KARVELAS: Well, I suppose at the heart of my question is about your will. And it is a key thing, because you’d expect – and we saw a few of those voices, they’re still quite muted, but you’d expect that you will receive some pushback because there is pressure on the Budget, and internally this is not going to be easy for you to argue for inside your own ranks. The question is will you – the guarantee question is about whether you will stare those concerns down and say we need to go beyond there because this could cost, what, 3 per cent of GDP ultimately?

MARLES: Well, again, I’m not going to speculate about a number. But to pick up on a couple of the points that you’ve made, there are absolutely fiscal pressures on the Budget in a range of areas, and really important areas, and defence inevitably has to be balanced up against those. That has always been the case. It was in respect of the last government. And defence should be subject to all the scrutiny and fiscal pressure that every other part of the Budget is. In fact, if it’s not, then you won’t see value for money in the defence spend, and that’s the fundamental criticism that we would have made of the former government.

KARVELAS: Minister, I just want to take you to the decision for a deferral of decisions, particularly on the navy surface fleet, pending another six-month review. Why are you doing that? Why have you kicked the can down the road on so many things? That’s not the only review. In fact, in this paper there are quite a few reviews which are to be had again. Why didn’t you make a call now?

MARLES: Well, again, we’re talking about turning around the mission of Defence for the first time in 35 years. You don’t do that in a single press conference. In respect of the surface fleet, it’s in fact a much shorter review than that. It represents really – well, next to submarines, the biggest capability in terms of expenditure within the Defence Force. We’ve felt that it would benefit from having a very short – over the next three months, three-four months, but through to Quarter Three of this year – a short assessment of its own based on the directions that have been put in place by the Defence Strategic Review. Now, people can criticise us about that if they like, but, you know, well before Geelong wins the Grand Final we will have an answer in relation to what the shape of our future surface fleet looks like. And I think taking an extra couple of months on its own in respect of that makes sense.

There are other areas where inevitably more work needs to be done, but in respect of guided weapons, for example, we’re making the decision right now to invest in guided weapons.

KARVELAS: Okay. Let me just quickly ask: four federal Labor MPs have broken ranks to join calls for the government to increase the JobSeeker payment by $24 billion in next month’s Federal Budget. You called for a review and called it out straight away, but your own backbenchers say this is urgent, Minister. What are you going to do?

MARLES: Well, firstly, I think this is an example of, you know, the significant issues that we face in the Budget. I’m obviously not about to speculate about the decision that we will make on Budget night, but what I can say to you is a few things; firstly, the Budget will be fiscally responsible, which is what you would expect. We will be completely focused on the questions around cost of living and the pressures that people are experiencing in this country. And we will have an eye to our most vulnerable in the decisions that we announce on Budget night –

KARVELAS: Okay.

MARLES: Now, I understand that, you know, the report that we received, we’re not in a position to fund every good idea, and we certainly understand the pressures for those on JobSeeker. But people need to wait and see what we announce on Budget night.

KARVELAS: I’m looking forward to it. Minister, thanks for joining us.

MARLES: Thanks, Patricia.

ENDS