Radio Interview, ABC Melbourne

SUBJECT/S: National Defence Strategy and the Integrated Investment Program; Defence’s funding measures to deal with inflation; Ghost Shark; long-range strike

HOST, RAF EPSTEIN: We need to triple our spending. This is on the text, the Chinese will invade Taiwan and the poo will hit the fan. And, Anne, you're in Mount Waverley with this. Look at Ukraine, that could be us, except the aggressor would be China. To tell us more about what the government is thinking, Pat Conroy joins us. He's the Defence Industry Minister and a Labor MP from NSW. Good morning.

MINISTER FOR DEFENCE INDUSTRY, PAT CONROY: Morning, Raf.

EPSTEIN: If I can just try and go through a few of those issues. Minister, firstly, the threat seems to be coming sooner, according to the government. If that's the case, why is the navy shrinking? The number of ships is shrinking over the next decade.

CONROY: Well, that's incorrect. The navy is not shrinking over the next decade. By the end of the decade, the navy will be larger, and that's part of our investment to more than double the number of.

EPSTEIN: Not as many frigates?

CONROY: No, no. We're acquiring eleven general purpose frigates as part of efforts to move from eleven major surface combatants to 26. That is the biggest investment in the surface navy since World War II. And we're moving at speed with the fastest procurement in the history of the nation. We'll be contracting and cutting steel and general purpose frigates in 2026, having only decided to acquire them this year. And the first one will be delivered by the end of the decade, that is lightspeed in terms of defence procurement.

EPSTEIN: If I can stick with the number of ships, because not everyone understands every one of these terms. Minister, my understanding is the current frigates we've got, we're losing two of them. We're going to go from, you know, from eight to six. I think the new ones we were going to get, we've gone from nine to six. So, when will the navy. In what. In what year will the navy be bigger?

CONROY: In the early 2030s. So, within the decade. So, we have eleven major surface combatants, eleven frigates and destroyers. Two of the very old Anzac-class will be retired in the next few years. But we've added an eleven extra frigates to the investment plan and six large, optionally crewed surface vessels. That means we go from eleven now to 26 over the next couple of decades, and definitely before the end of the decade. The surface fleet will be larger in the early 2030s.

EPSTEIN: You can’t determine which year?

CONROY: In the early 2030s

EPSTEIN: 2030s?

CONROY: Well, I can say to you the early 2030s but I can assure you that they're much more capable vessels than the ones we've got now that were built in the late 1990s. In the meantime, we're upgrading the Hobart class air warfare destroyers with the latest combat system, with Tomahawk land attack missiles, and with the latest SM air defence missiles from the United States. So, we're upgrading the current fleet and we're building a new fleet and we're acting at lightspeed in terms of defence procurement to do that.

EPSTEIN. So, just more generally, I think you called it, you said you've used lightspeed a few times. How do we know that defence is going to start getting this right? It appears to be a bipartisan problem. A lot of talk. I think you criticised the previous government for announcing $35 billion on weapons and only actually spending a billion. But that aside, how do we know Defence is going to spend more efficiency and not have budget blowouts and timeline blowouts?

CONROY: Well, there's two split issues you identified there, Raf. One is matching rhetoric with action. The last government made $42 billion worth of announcements of news weapons without funding it. What yesterday's announcement was providing the funding for $330 billion of funding over the next decade, a $50 billion increase in funding against the previous plans and $5.7 billion over the next four years. So, more funding locked into the budget and that will be apparent on budget night next month. Secondly, we're making Defence procurement reforms because you're absolutely right, there's been too much waste in the past and not enough speed in delivering this equipment. I'll give you a couple of examples how we're moving faster. Those general purpose frigates, an existing design and build so that we get them by the end of the decade. Today I'm announcing that we will be acquiring extra large autonomous undersea vessels, the Ghost Shark. And that's something that's only been developed over the last couple of years. So, moving incredibly fast there. Another one is we'll be manufacturing missiles in Australia for next year, within two and a half years of us developing that plan. So, they are three examples of us moving much faster and actually applying more resources locked into a budget to deliver, given the security challenges we've got and our need to protect the Australian people.

EPSTEIN: If I can, if we get time, I want to come back to Ghost Shark, because I think they are underwater drones. Just on numbers, you sort of accuse the Coalition of making announcements and not funding them. The numbers do sound big, 50 billion extra over a decade. But there's an election in a year's time and what you are announcing, it's a little over a billion each year for the Defence department over the next four years. I think the Defence Minister agreed yesterday. That's about two and a half percent increase year-on-year for the Defence department. If you drill down into those numbers, that is an increase that could get eroded by inflation, isn't it?

CONROY: Well, no, and this is a really important point. This funding increase is on top of how inflation is treated by the Department of Defence. The Treasury bakes into Defence’s funding measures to deal with inflation. 

EPSTEIN: So they get indexed?

CONROY: Well, they get a form of indices that deal with inflation. So, this $5.7 billion increase in the next four years, of how they deal with inflation. And secondly is the biggest one off increase in defence funding in decades. And to give you an idea, by the end of the decade we'll move from, we'll have increased in real terms the share of the national economy being spent on defending the nation by 20%. That is a huge increase in anyone's books and that money is flowing through right now. And that's a really important point to make.

EPSTEIN: If I can talk about the actual threat as Defence Industry Minister, Pat Conroy, all of the talk about China's military, either we either pour fuel on that fire or we stop that fire from spreading. How should we judge which of those your government is doing?

CONROY: Well, if I can tackle it a different way, we're doubling down on our international diplomatic efforts. We're putting more and more time and resources into playing complimentary role of middle power. Penny Wong is doing a superb job doing that. I'm also Minister for the Pacific, so I'm spending lots of time in the Pacific and the PM's doing a ton of work. So, we're investing in our diplomatic efforts to improve the circumstances, particularly in Indo-Pacific. But we're also increasing the strength of our defence because that is an equally important way of deterring aggression.

EPSTEIN: Does it actually deter, do you think? I guess that's my question.

CONROY: Well, absolutely. Because you need to impose doubt and question marks in the minds of any potential aggressor. You need to try and diffuse the global situation through diplomacy. Then you have to make it as difficult as possible for people to think about coercing Australia. And that's why we need to invest record amounts in our Australian Defence Force to make it harder for anyone to think about coercing us. And that's why we're also changing the Australian Defence Force into one focused on long-range strike to deter aggression. Investing in the most capable submarines in the world, investing more and more in the navy so that anyone trying to coerce us has second thoughts.

EPSTEIN: And the idea that it is the worst strategic environment since World War II, Government said that when they sent Australian troops to Vietnam, we've lived through the Cuban Missile Crisis. 9/11. I think the same words were used. I think the same words were used by John Howard when we announced we were going to send troops to Iraq. It's a reach too far, isn't it?

CONROY: Well, I disagree. Ultimately, this is a question for policy commentators rather than politicians. But I want a couple of points. One, even at the height of the Cold War, short of a full blown nuclear exchange, which obviously is an existential threat to the entire world, there was less of a global contest in the Indo-Pacific. It was focused in Europe and the North Atlantic.

EPSTEIN: But the communist hordes were going to descend on Australia. I mean, that was exactly the threat, that was why the troops were sent.

CONROY: Well, without getting into history wars, I'm proud to be part of a political party to oppose involvement in the Vietnam War because we reject that thesis.

EPSTEIN: Ok.

CONROY: What is a factual statement is that we're seeing the greatest arms buildup in our region since 1945. We're seeing the rise of a country in China that is employing, according to the DSR and the NDS, coercive tactics in pursuit of its strategic objectives. It's using forceful handling of territorial disputes and armed intercepts of vessels to exert its influence and not operating in accordance with international law all the time. So, these are examples of the strategic circumstances we're facing. See, people can decide how dire it is compared to other times, but we're facing the biggest arms race in our region since 45. We're facing a rising global power that doesn't always follow in accordance with international law and we've got to respond accordingly. 

EPSTEIN: Ok.

CONROY: That's our duty as the government to protect the people and interests of Australia.

EPSTEIN: Pat Conroy, I'm going to leave it there. I appreciate your time. Not the world's best phone line, but really appreciate you making time for us.

CONROY: I apologise for that, Raf.

EPSTEIN: No, it’s not your fault, no problem

CONROY: Cheers, okay, bye-bye.

EPSTEIN: Pat Conroy speaking to us. I think he's actually at one of the military bases in Sydney. He is the Defence Industry Minister. It's a huge amount of money, $50 billion. If they do end up spending it, the Government insists what they are increasing is significant. You heard the Minister running through those numbers, you heard him assess the threat, the biggest threat to our region in terms of an arms race since World War II.

ENDS