Press conference, Sydney

SUBJECT/S: Surface Fleet Review 

DEPUTY PRIME MINISTER, RICHARD MARLES: Welcome, ladies and gentlemen. It is an enormous pleasure to be here today on a very historic day for the Royal Australian Navy. I'm joined by Pat Conroy, the Minister for Defence Industry; and Vice Admiral Mark Hammond, Chief of Navy. And we also have in our presence Vice Admiral David Johnson, the acting Chief of the Defence Force.

Today, the Albanese Government is announcing an increase in the number of warships in the Royal Australian Navy to being the largest fleet since the end of the Second World War. Right now, the Royal Australian Navy has 11 warships. As a result of the Government's response to the service fleet review, today we are committing to take that number to 26. At the heart of that will be building six Hunter-class frigates at the Osborne Naval Shipyard in Adelaide. This will see the first of those ships delivered in 2034, which is the current timeframe.

We're also announcing today that we will procure a new general purpose frigate, of which we will procure 11, and this will be a new class of ship for the Royal Australian Navy. We're also procuring six large optionally crewed surface crewed- surface vessels. The LOSVs are in development with the United States.

They have the capacity to operate in an uncrewed fashion, but it is the intention of the Royal Australian Navy to crew these vessels. They will operate in combination with the Hobart-class anti-warfare destroyers, Air Warfare Destroyers and they will also operate in conjunction with the Hunter-class frigates. These ships in combination with the three existing Air Warfare Destroyers will take our service fleet of warships to 26. It is the largest fleet that we will have since the end of the Second World War.

When the Government was elected last year, the first surface combatant that was due to come into service under the plan we inherited from the former government was the first of the Hunter-class frigates, which, as I said, is due to come into service in 2034. That timeline will be met. Because of the strategic circumstances that we face today, we are announcing that we will be accelerating the procurement of the general-purpose frigate. This will see the first of those in service by our Navy by the end of this decade and over the period through to 2034, which is when we expected to inherit our first service combatant and under the plan we inherited, under this plan, we will have four, so we will be accelerating the service combatants into our Navy.

The plan that we're announcing today will underpin continuous naval shipbuilding at the Osborne Naval Shipyard in Adelaide. The six Hunter class frigates will be built there. The last of those will be completed and enter service in 2043. Today, we are announcing that the replacement for the Hobart class, the Air Warfare Destroyers, will also be built at the Osborne Naval Shipyard in Adelaide after the completion of the six Hunter class frigates. 

That will require a decision to be made in respect of what ship that will be by 2035 and the process of making that decision will commence later in this decade. That means that we have a multi-decade pipeline of shipbuilding in place for the Osborne naval shipyard in Adelaide. But today, we are also committing to continuous naval shipbuilding in Perth. And today's plan effectively establishes the Henderson Naval Precinct.

Last year, we announced that Austal would be the Government's strategic shipbuilder in Western Australia. And we announced two Evolved Cape Class Vessels would be built by Austal along with two classes of Army landing craft. That will continue. 

And once that work is complete, the general-purpose frigate will be built in Perth at the Henderson Naval Precinct. And the six LOSVs will also be built at the Henderson naval precinct. Again, this provides a multi-decade pipeline of work in Perth for the Henderson Naval Precinct. Now, it will take time to consolidate and establish that precinct and, as I've said, we need to accelerate acquiring the capability of the general-purpose frigates into the Royal Australian Navy, so the first three of that class will be built offshore.

The Surface Fleet Review has commenced the process by which we will choose the design for that ship. Indeed, it's down selected to four potential designs, emanating from Spain, Germany, South Korea and Japan. It is anticipated the decision of the specific design will be made next year. 

But what this means in underpinning continuous naval shipbuilding in both Adelaide and Perth is that a person beginning their working life now in this exciting industrial endeavour, has the prospect of being able to work in that field for the entirety of their working life. This will be a critical national asset for the country. It builds sovereign capability, but it builds industrial capability within our broader economy. 

We are announcing an enduring commitment to the establishment of the service fleet over the course of decades but a critical component of today's announcement is how this is funded. Over the course of the next decade, the cost of procuring the service fleet that I've described will be $54 billion. 

Now, in the Defence budget today, there is $43 billion allocated to our service fleet over the course of the next decade. And so a component of today's announcement is that we are increasing Defence spending by an additional $11.1 billion over the decade, which includes $1.7 billion over the Forward Estimates, so that this plan is fully funded.

This component of today's announcement sets this apart from announcements that have been made in relation to Defence procurement by the former government over the last decade. There's no make believe in this. This is real money, which has been worked through the Expenditure Review Committee, which will be allocated in the Budget. And when you combine this with the $30 billion of additional Defence spending over the course of the decade that was provided for in last year's Budget, it takes our nation's Defence spending in the early 2030s to 2.4 per cent of GDP. 

Now, when we came to Government in May of 2022, it was answered that Defence spending under the former government's plan in the early 2030s would be at 2.1 per cent of GDP. The decisions we made in last year's Budget and this decision that we are making right now sees a significant increase in Defence spending in this country. And it is needed, given the complexity of the strategic circumstances that our country faces.

I want to take the opportunity to thank, Willie Hilarides, Rosemary Huxtable and Stuart Mayer, who were the leads in the Surface Fleet Review. This was done over a very short period of time. Their work was thorough and thoughtful, and we owe these three a debt of gratitude. Really, they have provided us a blueprint to building the Navy of the future. And as a result of their work and as a result of the Government's response to their work, a person who is joining the Navy today has the prospect over the course of a decade or so from now of crewing an Australian-flagged nuclear-powered submarine or a state-of-the-art general frigate or the most advanced anti-submarine warfare capability in the world.

And this is an enormous opportunity for people who are seeking to work and serve in the Royal Australian Navy in the future. And so today's announcement means that we will be building a fleet which is bigger. It will be a fleet which comes into service sooner. The building of this fleet will underpin continuous naval shipbuilding in both Adelaide and Perth and we are paying for this fleet.

MINISTER FOR DEFENCE INDUSTRY, PAT CONROY: Thanks, Richard. The defence of the nation is the number one priority of any federal government. Today is a good day for the Australian Defence Force and it's a great day for the Australian naval shipbuilding industry. As the Deputy Prime Minister has said, we are delivering a larger, more lethal Navy sooner, and that means continuous naval shipbuilding work for our skilled workers throughout the country, particularly in Adelaide and Perth.

The great news about today is by delivering the largest surface fleet since World War II, in a measured, calm and well-funded way, we are delivering certainty to the shipbuilders of Adelaide and Perth who have been crying out for that. So our commitment to continuous naval shipbuilding in Adelaide means an electrician working at the BAE shipyard in Osborne knows they have work for decades to come on the Hunter-class frigates and transitioning into the replacement which is the destroyer.

It means a welder in Perth working in the Henderson Shipyard Precinct knows that he or she has got decades of work building our Evolved Cape Class Patrol Boats, our landing craft, medium and heavy, our general-purpose frigates and then our large, optionally-crewed surface vessels.

These announcements today will support 3,700 direct jobs. 3,700 high-skilled, well-paid jobs throughout the country as well as thousands of jobs in the supply chain. 2,500 jobs in Adelaide, 1,200 jobs in Perth, contributing to our national defence.

Importantly, as we ramp up production in Perth of the landing craft and the patrol boats and we consolidate the Henderson Shipyard, we will accelerate the delivery of the general purpose frigate. And these are large vessels, ladies and gentlemen. These are not Corvettes or light frigates. These are vessels that will range in size potentially from the same size as an Anzac class to 50 per cent bigger than an Anzac class carrying twice as many missiles.

So to accelerate delivery of these vessels, the first three will be built overseas in a yard that is constructing these vessels right now, in a yard that has put vessels in the water. This is critical to delivering the capability as soon as possible to the Royal Australian Navy. And as the Deputy Prime Minister said, a decision next year, cutting steel in 2026, delivery by the end of the decade, which means we'll have four times as many warships in the water in service, in ten years' time compared to the last government's plan.

Importantly, by building those three in an existing shipyard, we de-risk the project by focusing on as little change as possible. We de-risk the project and allow our skilled workforce to build up in Henderson working on landing craft and then to transfer across to the general-purpose frigate. So this is a great day for the defence industry in this country. 

It's a great day for those workers in Adelaide and Perth, who now know that they can work their entire career in the shipyards, delivering capability to the brave sailors of the Royal Australian Navy. I invite the Chief of Navy to make some comments.

CHIEF OF NAVY MARK HAMMOND: Thank you, Minister. This is the most consequential investment in the surface combatant force of the Royal Australian Navy in generations. It is a serious investment and a serious challenge for our Navy to step up and deliver. For a free, ocean-trading nation like Australia, that derives our economic wellbeing and national security from the sea, and, incidentally, the custodian of the third largest Exclusive Economic Zone on the planet, a strong Navy underpins a strong Australia and against the backdrop of increasing geostrategic uncertainty, as described in the Defence Strategic Review, this is a consequential investment in national security.

For the men and women of the Royal Australian Navy, this is a real shot in the arm in terms of the understanding of the important role that the Australian Navy sailors play across the Indo-Pacific, supporting our three principal roles of diplomacy, deterrence and preparedness for defence of Australia. This will be the largest surface combatant force we've operated in generations.

It will also be, in time, the most lethal. So, again, a very significant moment in the chapter of the Royal Australian Navy, a welcome investment and some serious responsibility and accountability to come to me and my leadership team to deliver, which we welcome. Thank you.

JOURNALIST: Minister, you are looking to get the 11 surface combatants up to 26 but six optionally crewed vessels are yet to be developed, is that a hole in this potentially? And you’re allocating $11 billion over ten years, this review of the Hunters and the other build had blown out $25 billion, so, is that enough?

MARLES: So to answer the question in relation to funding first, it is enough. And this fully funds the surface fleet over the course of the next decade and beyond and it really does stand in contrast to the sorts of announcements that we saw being made by the former government. We saw the former government announce a $35 billion guided enterprise for which they allocated $1 billion. Today we're announcing the money that will ensure the full funding of this and this money will be in the Budget we deliver in May. And I want to take the opportunity to thank the Treasurer, the Finance Minister and the Prime Minister, of course, for their support of the service fleet and of defence funding.

JOURNALIST: The LOSVs, the fact, you know, that's yet to be developed. It's, you know- 

MARLES: Well, this is a program which is being developed by the United States. We have had discussions with the United States. The timing for this is to be built from the mid-30s through to the mid-40s. We are confident about the development of the program over that that period of time. And this is an important capability which will work, as I said in conjunction with both the Air Warfare Destroyers- AWDs and the Hunter class frigates. 

JOURNALIST: DPM, $54 billion over the next decade. What is the total cost of these programs until the 2040s to get up to 26 ships? And secondly, the fleet is going to be shrinking in the short term with the retirement of the Anzac Class- coupled with the retirement of the Anzac Frigates, how do we credibly project force and maritime power in the 2020s when we're told this is a crucial decade, the possibility of war over Taiwan by 2027?

MARLES: Again, to answer the question in relation to funding to start with; we've announced a capability going forward and in that sense it's similar to the announcement we made in relation to the nuclear-powered submarines. The critical component - and the meaningful way in which to answer the cost - is to explain over the decade the funding is there. That is the period over which the Federal Budget funds defence and so the funding is in the Budget to pay for this. That's the critical point to make. In relation to your second question... 

JOURNALIST: But do we know how much it is going to cost?

MARLES: Well, it depends on what timeframe you take. This is an enduring capability, going forward. Whether you take a date in the mid-2040s, mid-2050s or mid-2060s, you'll get a different number. Over the course of the decade, which is the period over which we budget, it will cost $54 billion and that money is there.

Can I just answer the first part of your question, which was in relation to the number of service combatants, the number of warships; we are announcing, as part of today's announcement, that HMAS Anzac will not sail again and she will be decommissioned in the near future. The circumstances of HMAS Anzac and the ageing of our fleet, but specifically the Anzac class, is a decision that any government governing at this moment in time would have had to face, and we are facing it. The important point is this: we inherited a declining fleet from the former government and we did not inherit a plan to replace it and that's the plan that we are now announcing today. This will see the first new service combatant come into operation this decade and on a timeframe when we were expecting to get the first service combatant under the plan of the former government, under this plan, we will have four. And so this is an acceleration of the development of our new Navy and it's an acceleration of that Navy being put into show.

JOURNALIST: Minister, which recommendations did you not accept and will the extra billions of dollars going into the Navy mean that Army is further gutted?

MARLES: Well the recommendations accepted and accepted in principle, obviously, are in the work and documents that we've provided to you. There's been significant investment in respect of Army out of the Defence Strategic Review. For starters, we announced last year the development of landing craft, medium and heavy- two army landing craft- which will be built, as I've just said, by Austal at the Henderson Naval Precinct. That's an investment in Army. We have put meaningful and significant investment into long-range strike capability: that's an investment in Army. We're seeing a restructure of the Army, which we announced last year. Coming out of the Strategic Review was a significant investment in Army and obviously there is investment in Air Force as well. Overall, we are taking defence spending, over the course of the decade, over the course of what is in the Budget, to 2.4 per cent of GDP into early the 2030s.

JOURNALIST: Mr. Marles we're in quite a desirable part of Sydney here. How substantial do you think are the savings as a result of the Defence Estate Review could help pay for weapons and some of these big programs that you are investing in?

MARLES: Well, this is a very nice part of Sydney but this is where Fleet Base East will remain- that was the point of that question. The Estate Review has been a really important piece of work. We need to be making sure that Defence's estate is fit for purpose, that it meets the strategic circumstances that we face and the Defence Strategic Review described those in detail, described the need to be focusing on our northern bases and in the Government's response to the Defence Strategic Review we announced additional funding for northern bases. But if you think about the Defence estate as an asset in total, we have to make sure that it is fit for purpose and modern. We're one of the largest - if not the largest – land owner in the country. It really matters that that land is working for the defence of Australia and that it is used in that way. So the Estate Review is a really important piece of work and we'll respond to it over the course of the next few month.

JOURNALIST: Minister, we are standing on the flagship- the Australian Navy’s flagship, in the case of a major power conflict- which is the strategic context to all of this, what role would as ship as large as this- the biggest we’ve ever had- have in that (Inaudible).

MARLES: Well, the two LHDs – of which we're standing on one are critically important ships within our Defence Force. The fundamental answer to that question is mobility. This is a ship which gives significant mobility to our armed forces and particularly our Army. We have made clear coming out of the Defence Strategic Review that what needs to be at the heart of our Defence Force is the capability to project. That means having a long-range submarine and it means having longer range missiles, but it means having an Army that can move and that's exactly what this ship is all about.

JOURNALIST: Minister, where do you find the staff required though in the shipyards and on the ships to meet the requirements?

MARLES: I might ask Pat and Admiral Hammond to add to the answer. It is a significant challenge to make sure that we have- to get the human equation right. That we have the people that we need to engage in naval shipbuilding, that we have the people that we need within our Navy to crew these ships. We are investing heavily in trade training around building the workforce required to build our future submarines, to build our future surface fleet. The training academy which we announced will be established at Osborne is fundamental to that. So, we understand that to get the people to build these ships, we need to be investing in training, and we are. In terms of those who serve in the Royal Australian Navy, this really a huge day for them. This says to somebody looking at having a career of service in the Royal Australian Navy that there is huge opportunity to participate in one of the most modern navies in the world and to be operating on leading, cutting-edge technology. Now, already great work has been done to reduce the separation rate for our Navy. We do need to be growing our Navy more. I think today's announcement is a really fundamental part of that and we're confident we can get those numbers.

CONROY: Thanks. And as the Deputy Prime Minister said, the shipbuilding academy that we're establishing in Adelaide will be critical to training the staff. We're taking a funny notion, we're actually going to train people. And that will be both for the new nuclear-powered conventionally armed submarines and our surface build. But importantly, it's about giving certainty to workers. The last government allowed a massive gap in work at the Adelaide shipyard between the completion of the Air Warfare Destroyer and work on the Hunter class. If you're a worker, you're looking at how to put food on the family's table and you're seeing an industry that's going like that. The strength of continuous naval shipbuilding is it delivers certainty for workers. As I said, an electrician working in Adelaide right now knows he or she can be working building ships for decades to come without a gap in their work. Same with a pipefitter in Perth- that gives them certainty. Some might be attracted to the wages if they want to be FIFO, but for a lot of them have the stability of knowing every day I'm going to the Osborne or Henderson precinct, getting paid well for a job where I'm doing my patriotic duty and contributing to our national defence, but I can feed a family, pay a mortgage and put my kids through school. That will be a huge benefit of this program and we've got some of the best skilled workers in the world. At the end of the Anzac class program, we were building Anzacs faster and cheaper than the home nation. So this gives certainty that we'll deliver that workforce to build these ships for decades to come.

CHIEF OF NAVY: I love talking about Navy workforce. For starters, our separation rate is 8.2 per cent and falling. That is substantially lower than the long-term average of 9.5 per cent. We've set an ambitious target to grow from our current strength of 15,000 to 20,000 and we're doing it against a backdrop of one of the most competitive marketplaces we've seen. There's been a more than 90 per cent correlation between unemployment in Australia and the ADF recruiting potential. So we are investing in new initiatives to increase the size of the Australian Navy and the integrated Australian Defence Force for that matter. So, to any young Australians looking for an idea as to what they might like to do, I would offer that we're an employer that underwrites your cost of living and we'll pay you to go and see the world and now is a great time to join the Australian Navy.

JOURNALIST: Minister, Can you I ask specifically on South Australia, Adelaide. A lot of guarantees today about job security going forward, jobs in the pipeline etcetera. You’re dropping the Hunter class frigates from nine to six and will be replaced by a ship which you don’t have the design of yet- you’ve got no idea what it is going to be. Can you guarantee the people of South Australia their jobs are secure there given that that would be their future?

MARLES: Yes, we can. And the most important reason we can is that today's announcement comes with the funding behind it, which is completely different to what we have seen in the past. The reality is that we inherited significant funding holes from the former government. This is now the plan by which we can provision and pay for our Defence Force, provision and pay for our surface fleet going forward, so they have that certainty. Today, we are making the decision that the successor vessel to the Hobart Class Air Warfare Destroyers will be built in Adelaide and that will happen at the conclusion of the building of the Hunter class.

JOURNALIST: Just a tactical question as well, you're making a major announcement today about a very new area of warfare in the Australian Defence Force, drone ships. What can you tell us about drone ships? Not yet designed, again not yet in the water, and you've pegged a lot of our Defence future on the prospect of having six of them. What can you tell us about them?

MARLES: To be clear about the LOSVs, this is a program which is being developed by the United States. We are talking about those coming into operation from the mid-2030s through to the mid-2040s, so that is the timeframe. It is true that these are being developed in a manner where they can be uncrewed, but it is our intention to crew them and I want to be very clear about that. Our intention is to crew these vessels. They will work in combination with- and have to work, as they're designed- in combination with the Hunter class frigates or existing Air Warfare Destroyers. They don't operate on their own. What they do achieve, and why we are pursuing them, is a significant lift in our vertical launch capability. It dramatically increases that. So we will be working with the United States in relation to this. As as I say, we are very confident about being able to put these in our Navy over the time frame we have described and this will be a really significant future addition to the lethality of our Navy.

JOURNALIST: Minister, we're seeing the total amount of combatant ships decline over the decade and it’s not going to jump back over 12 until the 2030s. Same with the subs coming in. Is this an admission, regardless of government, that Australia will not have a huge role to play in the Pacific this decade that we’re more looking to the 2030s?

MARLES: We have a significant role we are playing right now with a capable fleet with the ships we're standing on as we speak, and that will continue. We, as I said, will see new surface combatants come into the Navy this decade. And so we will see an evolving capability in terms of our service fleet and in terms of our naval capacity. When we announced the pathway by which we would acquire nuclear-powered submarines a year ago, a critical component of that was to ensure our capability grew from this moment onwards and it does. And the same can be said in relation to our surface fleet, it is certainly the case that in a decade from now, into the mid-2030s, we're talking about a completely different level of capability for our Navy relative to today.

JOURNALIST: On that, if a conflict does breakout in the next five to ten years, which most experts agree is not beyond the realm of possibility. Can Australians be confident that the Navy we have got, the few ships that will be delivered by then that we have the capability to defend our coastline, to defend our borders with what we will have by then?

MARLES: We have a highly capable Defence Force and we can be confidence that it will enable us to play our part in future contingencies over the course of the next decade. What is critically important to understand is that as we look forward, with an uncertain world in terms of great power contest, that we have a dramatically different capability in the mid-2030s to what we have now, and that is what we are planning for and that is what we are building. 

JOURNALIST: Deputy Prime Minister, the OPVs- the Arafura program, (inaudible)

MARLES: The answer to the last part of the question is there have been conversations around that. We are really indebted to the Surface Fleet Review team for undertaking, you know, a detailed and thorough analysis of what our capabilities are- what the capabilities are that we need going forward. In the context of that, you know, we have made decisions which see six Hunters instead of nine, six Arafuras instead of 12. The capability that the Arafura gives us, combined with the Evolved Cape Class Vessels that we have within our Navy, we see as being able to meet the needs of the constabulary vessel of our border security. And a critical part of the announcement today is that going forward, we see the Evolved Cape Class Vessels as being at the heart of the constabulary capability that we will need for that function, for our border protection.

JOURNALIST: It has been halved to six, and we’ve already had a disruption. How soon can we see them in the water? And will they be upgraded with missiles or something to make them more lethal?

MARLES: There is no intention to do any greater lethality than what was originally planned. That is a question which is difficult to answer for the reasons I'll explain. This is a Project of Concern right now. Obviously, we are working with the shipbuilder in relation to it. What I can say is that as you rightly said, there are six which are being constructed right now. They will be delivered. None have been delivered yet. And we are working very closely with the shipbuilder to have those six vessels in operation as soon as possible.

JOURNALIST: (Inaudible) workforce demand… (Inaudible)

MARLES: Well, we are confident that the workforce demands in terms of those serving in our Royal Australian Navy will be found within the existing projection for what we are planning and that's around the sorts of capabilities, the sorts of ships that we are looking to procure and the size of those. An important part of how this plan has been put together is to ensure that the surface fleet we operate can be serviced by the planned increase in the Royal Australian Navy, which we are intending to execute. Thank you very much.

ENDS