Television Interview, ABC Afternoon Briefing

SUBJECTS: RBA rates decision; Indo-Pacific Sea Power Conference; Defence Budget; Defence Strategic Review; AUKUS; Hamas-Israel conflict.

GREG JENNETT, HOST: Richard Marles, this time in capacity as Acting Prime Minister, welcome back to the program. And wearing that hat, we might indulge a question on the economy with the news coming from the Reserve Bank Board this afternoon of another interest rate hike. They say that they've received updated information and the weight of this information suggests the risk of inflation remaining higher for longer has increased. Does the Government now have to cut its cloth accordingly when it comes to either support for consumers or spending that might have to be curtailed?

RICHARD MARLES, ACTING PRIME MINISTER: Well, firstly, Greg, we very much understand the pressures that are faced by the Australian people, by businesses, by family household budgets and the difficulty that this decision represents for them. I mean, obviously inflation is abating more slowly than we would like. But what it does is make clear the importance of the Government’s strategy, really, coming into power. Firstly, we've wanted to make sure that we are managing the economy and the budget in a way which does not contribute to inflation. That's why we've produced a surplus, something that the Liberal Party never did. And in terms of the expenditure that has been contained within the budget, we've had $23 billion be focused on easing cost of living pressures, making childcare more affordable, making medicines cheaper, seeing fee-free TAFE, the package that we put in place at the end of last year to put downward pressure on household energy bills. A lot of that has been done in the face of the opposition of the Liberal Party. So  we will continue to be very focused on the pressures on cost of living and making sure that we are doing everything we can to support Australians through what is obviously a very difficult circumstance.

JENNETT: Does the risk of recession go up from here, in light of the fact that the Board notes a period of below trend growth is occurring and now it's having to tap the brakes even harder once again?

MARLES: Well again, we are focused on the issues of cost of living. We have been focused on economic growth as well and we will continue to work on measures that help. That if you look at where we have invested, it is in areas which help with the productive capacity of the economy, such as investing in our TAFE sector and enabling people to get those skills. That helps people get out into the workforce to make sure that we are dealing with supply constraints in respect of skills, all of which helps with the question of growth. So, we're focused on economic growth, we're focused on the cost of living. We very much know, though, that this is a difficult decision for Australians to hear and we will continue to support them through this period.

JENNETT: All right, let's take you to defence matters, because you are there at a defence conference in Sydney. You've taken umbrage at former army chief Peter Leahy. He's really savaged the Government for current levels of defence spending and other planning that is underway through the Defence Strategic Review. You've said former generals can be sad about the fact they can't drive infantry fighting vehicles around Australia, but we need a force able to project. I think the central criticism of Peter Leahy is by when, though? When will that projection become possible? And is it timely matched against the shorter warning periods that the Strategic Review brought to us?

MARLES:  Well, firstly, we're increasing defence spending. So the central criticism that was made by Peter Leahy is just fundamentally wrong. We went to the last election committing to the increased trajectory of spending that was put in place by the former government. We've done that and then increased that by another 10%. So the idea that there have been cuts here is just plain wrong. The former government, in 2020, did a Defence Strategic Update which rightly observed the shorter warning times for threats to Australia, as you say. From there, it did nothing. I mean, asked the question, left it begging and did nothing. From the moment that we have come into government we have sought to put in place the foundational thinking to work out what kind of a defence force we need in the face of the very challenging strategic circumstances that we face. Now we've been in government for 17 months. That's it. In that time, we have put in place the means by which we will acquire a nuclear-powered submarine capability and we've got the funding for it. We've looked at such things like the guided weapons enterprise, making sure that we are able to have longer range strike. The former government went there, they just didn't put any money behind it. We've doubled the funding to that so that we can actually see the manufacture of missiles in this country in two years’ time. And that is about projection. And we have announced the restructure of our Army, which will see it based in our northern bases, focused in that way, with the specific emphasis on expertise around the littoral manoeuvre, which will make it an Army which is nimble and able to project. Now, in the midst of that, there are difficult decisions, but if you start on the proposition that you can change nothing, which is what we see from so many of the commentators, then we are not going to get the focused Defence Force that we need, which actually is orientated to projection. And so we are making hard decisions, we make no apologies for that, but we are putting defence resources where they need to be and that is in the place of projection and we are doing that rapidly.

JENNETT: Alright. Peter Leahy is also pretty despairing about Australian defence industry and its prospects here, as is former foreign minister Alexander Downer for that matter. I'm sure you read his remarks a couple of weekends ago, fearing cost blowouts for AUKUS submarines. What is the cost premium of local builds on the more complex platforms, be they AUKUS submarines, the Hunter class frigates and others that you're currently grappling with? Is it in the order of 40%, which I think Alexander Downer has suggested?

MARLES: Well, to be honest, Greg, the comments of both are out of date and speak to a paradigm which existed a long time ago. I mean, the circumstances that we face today is that what has been put into stark relief, really by the conflict in Ukraine, is that the defence industrial base across our friends and allies is stretched and that if we want the capabilities that we need in the future, then we will need to make our contribution to that defence industrial base. So, this is a point that we've been making in relation to nuclear-powered submarines. We will only get that capability if we stand up a production line in Australia. Because the production lines in the UK and in the US are already stretched in terms of providing for the US. And that's why you've seen the difficult decisions that we've made in terms of contributing to those industrial bases. But that's nothing compared to what we will invest in the industrial base in this country. Again, guided weapons is another example. If we want the war stocks that we must have in terms of missiles, then we are going to have to see the manufacture of those occur in Australia. And so we have made significant investments, which the former government absolutely did not do, to see manufacturing in this country start in the next couple of years. And I could go across other examples as well, but what that speaks to is the opportunity for Australian defence industry going forward. The very need to make a contribution to the net industrial base of the countries that we're working with represents a huge opportunity for Australian defence industry and is the very reason why, despite what they say, you will see growth in the Australian defence industry. You look at the conference that I'm at now, the Indo Pac Expo, I mean, there is an enormous amount of optimism about the opportunities for working in the Australian defence industry in the years ahead.

JENNETT: Well, it does sound like an argument you're going to have to run and I guess in your view, try and win to convince people like Peter Leahy into the future. Can I just take you to another current and running issue–

MARLES: Well, can I just make this point, Greg?

JENNETT: Yeah, sure.

MARLES: On that, I mean in a sense this is going to play out. The point I'm really making is that because we are focused on getting the capability we need and we will make the decisions which get us there, you're going to see defence industry in this country grow. I mean, this is an inevitability. It's an inevitability precisely because of the state of need that the defence industrial base across the countries that we work with are facing at the moment. So, whether or not others are saying it and whether there is an argument out there, and whatever the outcome of that argument might be, there is going to be growth in the Australian defence industry. So, this is going to happen and others can have their say. But I can tell you, the defence industry is voting with its feet in terms of understanding the opportunities that exist in Australia today.

JENNETT: All right, we'll take that as a statement of governmental determination. Can I also take you, Richard Marles, just to a matter concerning the Middle East? Israeli Prime Minister Benjamin Netanyahu, who has indicated Israel plans to take, quote, overall security responsibility in Gaza, for what he describes as an indefinite time. Does Israel have that right in the Australian government's view? And would it prolong conflict and suffering in the Palestinian territory?

MARLES: Well, I mean, we've made clear the right that Israel has to defend itself in the face of the attacks that were undertaken by Hamas back on the 7^th of October. And obviously those attacks were directed at innocent people, they were not directed at combatants. And we do acknowledge Israel's right to defend itself. We've also been really concerned about the humanitarian situation in Gaza, about the plight of innocent Palestinians, the vast bulk of whom have nothing to do with Hamas. And it's really important that front and centre, in terms of the way in which Israel goes about its work, is the safety of innocent Palestinians in Gaza. That’s why we have been calling for humanitarian assistance to be allowed into Gaza. It's why we've been calling for a pause to allow for humanitarian assistance to be provided, and we will continue to advocate on behalf of the humanitarian issues which are impacting Gazans.

JENNETT: All right, just finally, on that score, the US has approved hundreds of millions of dollars in new arms sales to Israel. You might be aware, Richard Marles, that there's a legal action on foot here from Palestinian organisations seeking greater understanding and transparency around Australia's arms exports to Israel. Have there been any since the 7^th of October?

MARLES: Well, look, obviously these matters are before the court, so I'm not going to go into details. But let me simply say, Israel has not sought any weapons from Australia and we have not provided any.

JENNETT: All right, we'll keep across developments in that court case. Richard Marles, really appreciate your time on a very busy day there in Sydney. Thanks so much for joining us.

MARLES: Thanks Greg.

ENDS