In Conversation, Submarine Institute of Australia Conference, Canberra

SUBJECTS: AUKUS; Nuclear-powered submarine workforce; Defence industry; Licence-free export reforms. 

MICHAEL FITZGERALD, MODERATOR: Our theme is ‘Australian submarines – cornerstone of deterrence’, and so we really want to talk about submarines, but I always like to start with your Deputy Prime Minister hat on. Submarines are very, very impacted by society, pressures on government, external pressures, which you no doubt deal with as Deputy Prime Minister. I'm wondering if you'd like to open up with some remarks concerning the broader geo-strategic situation, the internal political situation? One of the things I noted to the delegates in my opening speech this morning was a recent Ipsos poll ranked defence as number 16 in what Australians care about, or where they rank them, and how we continue that conversation to get our fellow citizens to realise the importance of defence, the importance of money we invest and you know, in balance with the other 15 things they also care about above that.

RICHARD MARLES, DEPUTY PRIME MINISTER: Well, thank you. Thank you for having me, and thank you for your kind words. Let me start by acknowledging the Ngunnawal people, the traditional owners of the land on which we meet. I like ‘cornerstone deterrence’, that’s a very good description of what submarines are. I think, just to go to the poll for a moment, how these questions are asked in terms of how people rank issues can have a big difference in terms of where issues are ranked. I actually think our nation's security, when I move around and speak to people, is much higher on the list than 16. But it is important, and I guess what it highlights, is that it is important that we have an ongoing and, kind of, granular conversation with the Australian people around the challenges we face, but the kind of Defence Force that we are seeking to build, which is why this conference and what the Submarine Institute does is so important. Submarines aren't readily understood by people on the street, and yet, they very much are the cornerstone of deterrence. And so I really, kind of take my hat off to you and everyone here for participating in this conference. 

I think, to try and answer the question in the broader sense, in its simplest we talk a lot about the complexity of our strategic circumstances, the strategic landscape, that has become more complex since we've been in government, but it was certainly complex as we came into government. The need for us to build our own capability, I think has only increased in the last two and a half years. And as I sit here now, I feel a growing pressure, if that's the right word, to make sure that we are building a more capable, a more lethal Defence Force, a Defence Force which has a greater ability to project, and the single most important platform in the midst of all of that is submarines. When we have tried to think through what our strategic challenges is in the context of that landscape, which, if I was to kind of try and summarise out of the Defence Strategic Review, is really about how in a more volatile world do we ensure that we can prevent any potential adversary from engaging in coercion with us? That is fundamentally the challenge that we are trying to meet. A Defence Force which can project is central to that. But the single most important platform in achieving that objective is submarines. And so the first answer that question – which I guess is a defence answer, you know, but a broader kind of foreign policy, strategic policy answer – is that we see having capable, long-range submarines as being completely central to our strategic need to building a kind of defence force which meet the strategic challenge for Australia, and that in order to have that in an enduring sense, going forward, we must move from a conventionally-powered submarine that we have today, as capable as the Collins is, to having a nuclear-powered submarine in the future. 

The next thing I would then say, in a broader sense around answering that question is: we think about these things in a strategic context, but we obviously think about these things in terms of the broader context of governing, framing a budget, which we have brought to surplus in the last two years, that's been really important for the wider economy to put a downward pressure on inflation and indeed, we have seen inflation go down significantly in the last two and a half years. They are important objectives of the government, and once you're in that space, clearly, not just in Defence, but across the board, there are finite resources because you are trying to bring the budget back to surplus which, as I say, we’ve done. But the important point to then make in the context of submarines is that in doing that, we are absolutely funding our future nuclear-powered submarine program. So if you like, growing our submarine capability, transitioning from Collins today to the nuclear-powered submarines in the future, is a key objective of government, funded objective of government in the context of a government which has brought the budget back to surplus. And so I think that should give, I think, people in this room, but actually the Australian community, a sense of confidence about how serious we are in achieving this objective.

FITZGERALD: Thank you very much, Deputy Prime Minister. One of things I love about your office is they always put out transcripts, so I can always see what we talked about last year. Last year you did invite us to hold you to account for meeting the pathway as it’s laid out. I wonder if you like to reflect on, maybe briefly, on the achievements this year, which I think are fairly well known in the crowd, but more importantly, looking forward. What are the issues on the pathway? What are the things you're looking to achieve in the near term? We just heard Ambassador Kennedy talking about how there’s three years until there is SSNs permanently based in the West, and seven or eight years until one’s got an Australian ensign, and we should get up every day and think what I doing to make that happen? 

MARLES: Well, that's a very good call to action from Caroline and it's right. You can fall into the trap of looking at timelines which are long, but in many ways they're not so long, in fact they're quite short and the only way you can go about this is on the basis that every single day matters in terms of achieving what we're trying to achieve. So first thing, what I said last year I reiterate today, it's going to be really important for people in this room to hold us to account, and indeed, all governments to account going forward around meeting this timeline. In some ways, there are– it's really hard to describe to people the series of decisions and the significance of each of those decisions that have to be made in order to keep this thing going. And you want to work through each of those decisions very thoroughly, work out pros and conscientiously make those decisions and there's a lot of work in relation to that. But it's really important that you keep making those decisions. I guess I would say, you know, at this point in the process, maintaining the tempo of that decision making is, you know, utterly critical to not, collapsing under the weight of this. And I think we have done that, but it's going to be really– that's the challenge of our Government, but the reality is it’s going to be the challenge every government over a multi-decade period in relation to this. It is a big horse that we're trying to get on. I know everyone here knows that, but it really is a big horse that we're trying to get on in terms of having a nuclear-powered submarine capability. We have seen now the establishment of the ASA, we've got the legislation in relation to the regulator, which has now passed the Parliament, we've seen the package since we last met that went through the US Congress at the end of last year, which was generational in terms of its impact – which is really important in terms of the submarine program, but actually it's important across the whole defence industry – but as part of that package was the actual sale of the Virginia class submarines to Australia. There was complimentary legislation as part of that which went through our own Parliament. We have seen works happen at HMAS Stirling, we're seeing the beginning of the construction of the facility at Osborne, we have seen the really important decisions taken in respect of the consolidation of Henderson, which was a really tricky process because we needed to get the industry players working together. Now, I'm deeply grateful to Austal and Civmec for what they've done in terms of making the decision to work together to deliver for the country, and that's been really important in enabling us to be able to actually draw a line around what will be the future Henderson naval precinct, which in turn, allows us with confidence to know that we can do the maintenance of our future nuclear‑powered submarines in WA which, again, I think is critical to give confidence to the United States that, you know, we are on time and there is movement which is going to allow the Submarine Rotational Force – West to occur in the time frame that we announced. So a lot has been done and I think for all of those who have been involved in this process, from Jonathan Mead down, that they can take a lot of pride from the efforts that they put in over the course of not just the last 12 months, but really the last three years, since AUKUS was first announced. 

Having said that, there are real challenges going forward. We had the AUKUS Defence Ministers meeting six weeks ago now, something of that order, in the UK. I think we need to be doing more in terms of working with industry in Australia to kind of assure, certify is the wrong word, but to assure them, to make sure there is the security in place which enables them to supply into supply chains both in the US and the UK, on the Virginia and the Astute programs. And that's a great opportunity for them, but actually, what happens in that process is you build industrial capability in those companies which will allow them to hit the ground running when we start to build our own submarines in Australia. So, I think we do need to be doing more in that space, we're very aware of that. So there are challenges that we need to keep progressing with. It's, you know– it'd be unlikely for me to be sitting here saying everything is perfect– everything is not, but a lot is, and I think we're aware of where we need to make up ground. And so I do fundamentally have a real sense of confidence that this program is going in the direction that it is, and part of that is based on the fact that we really are trying to interrogate ourselves, hold ourselves to account about where more needs to be done. That's what I was asking of this group last year, it's what of this group today, it’s in fact when we met with our counterparts from Britain and the US six weeks ago, what we asked them, they need to hold us to account. They're doing a big thing in terms of providing us with this capability, but the biggest task is at our end, as we try to get on this horse. So it really is going to be a collective effort but I think we do feel enormous progress is going to happen. 

FITZGERALD: So we're talking about real urgency here, between three and eight years, but one thing that spoke to me is how long this program is and how much time there is to do things and do things well. In preparing for this conference my 22-year-old son asked me what I was doing at the kitchen table, we had a chat about it and his takeaway was, well, I’ll be too old to be the first crew of the SSN-AUKUS. We debated and argued that, and the fact he also studied nursing and loves nursing, that's probably going to be the impediment as well. But what it reminded me is whether it be skills or whether it be industry, we need to lay the foundation to have the industry we need in the future, particularly when we start building submarines. But industry, particularly small business, medium businesses, they need cash flow, they need to make profits year in year out, to be here into the future. So I wonder if you might reflect on industry moving forward now that the contracts have been signed, and how we're going to take Australian industry on that pathway to develop them, as well as order parts and services and the like from them.

MARLES: Really good question. Well, just firstly on your son and those imagining that they might be a part of one of the crews. It's a really good example of the fact that, yes, there are long time frames. The first Australian-crewed vessel is in the early 2030s, the first SSN-AUKUS will come online in the early 2040s, so we can kind of think ‘gee that’s a long way down the track’. When we had the USS Hawaii, and this was one of the real achievements of this year, go through its tender maintenance process at HMAS Stirling a couple of months ago in September – to be clear, this is the first time we've seen an American nuclear-powered submarine undergo maintenance outside of the United States or a US base, it's the first time that we've seen non-US citizens participate in that maintenance program, it's ground-breaking in terms of what the US is doing, and that was happening here – but we met on board an officer, an Australian officer, who had gone to the US, come back here with the USS Hawaii, had gone through the Nuclear Power School in in the US as a submariner, and was now going to be serving on the USS Hawaii for the next two years, right now, on this day. Which is to say, these things are in the future, but they are right here now. And I'm talking about a submariner who is on the crew of a nuclear-powered submarine on this day, building skills so that very submariner can be crewing an Australian vessel in the early 2030s. But their nuclear-power submarine career is happening right now. That applies to industry as well. It's kind of why I referred to that earlier. 

The way we get up to speed in terms of being able to build submarines in Australia is by making sure that we've got Australian businesses participating in the supply chains of the building of the Virginia class submarines and the Astute class submarines in the US and UK respectively, right now, or as soon as possible. This is a great opportunity, as I said, but it's a really critical step that that occurs. And to be clear, we are in the process of getting that happening. You know, I'd like to see that happen quicker but to say, we're all aware of the need for this to happen. But the point I was then going to make is that there is incredible capability in Australia, I’m talking industry now, which derives from, I think, a lot of what we do in this country, but particularly resources. So to take, you know, an example, Hofmann Engineering, which is in Perth. People will know that company. They’ve done a lot of their work off the back of the resources sector in Australia. They are one of the most specialised, capable heavy engineering companies in the world. They have built the biggest gear in the world, meaning coal (inaudible). What on earth is this for? It’s for crushing rocks on a gold mine, so go through that process, but when you're there and you're walking around and you look at what they're doing, you realise actually that the industry that we've got in this country has really built capability which we can definitely transfer to the to the making of submarines. And indeed, when folk from the US have come and looked at Hofmann and seen what they do, they’re kind of amazed at the capability in respect of heavy engineering which exists here. But when you think about it, it makes sense that we exist here. I mean, we've got this industry. W need to be really auditing all that we do in this country, the kind of– what are our advantages, you know, playing to our strengths, so that we can get as much of those companies as possible, kind of thinking submarines as well as resources, or whatever else they do. And that's not doing that in three, five, eight, ten [years] it is doing it now. Doing it right now, and there's an opportunity to do it now, and the opportunity now comes from the legislation that went through the Congress at the end of last year and through our Parliament at the beginning of this year. So the steps are being taken to enable this to happen. And you know, when you do take a step back this thing– I constantly get asked, which is fair enough, and I'll be constantly asked for next five years, is AUKUS really going to happen? Is this bit going to happen? What happens if someone gets elected here? What happens there? It's happening. It is clearly happening and it’s really exciting. Some bits are happening faster than others, that's inevitable, but this thing is happening.

FITZGERALD: Thank you. Just mindful of time because I know we’ve got short time frame, but we really appreciate you making the time during the sitting week. I’ll just asked one short question, because you've touched upon it, and then maybe a few questions from the audience. There's no shortage of articles, opinion, commentary on what the government should do, but from the government, what you've touched on, but maybe you could summarise, what should delegates at this time, academia, industry, even our government employees here today, what would the government ask them to be focused on doing?

MARLES: Well, look, I mean, there's a lot of people who are in the service of government here, I can see quite a few uniforms down front, so if you're on the government's payroll, you know what you need to be doing. But, you know, what an opportunity. I mean, you know, I've said this many times, one of the great privileges of the job I hold is to be able to engage with people who have made the decision to serve and people who have made the decision to serve, as so many in this room understand, they do so because they want to be there for the nation, they want to make a contribution, they want to make a difference. You can't be making more of a difference now than what is there on offer in terms of giving Australia this capability. So it is genuinely, I think, just the most exciting time to be involved in the ADF, to be involved in Defence. You can then kind of extend that to defence industry. You know, the opportunities to participate in this are genuinely great opportunities, building skills, great businesses, all that stuff. Just a fantastic opportunity to serve your nation, to make us safer, to change the character of our country, and so much for the better. So there's that. I think, for the institute itself, for journalists, for academics in the room, it comes back to that call that I may last January and reiterated today. There needs to be a holding to account of government, of people sitting in this chair, constantly. That needs to be done with intelligence, clearly, but please bring that intelligence to the table. But there is– it's such a big thing to do that, you know, we need to know where balls have been dropped, where cracks are opening up. We need to know that so that we're doing everything we can to pick them up again, to fill in those cracks, to make sure that we are able to keep this thing on track. We are not going to get through this without intense scrutiny. So give it to us. Like I really, genuinely mean that, with intelligence, but give it to us. Because that is the way in which, in a genuinely collective sense; government, industry, academia, and the broader Australian community, we achieve this great Australian project, which really is, I think, one of the most exciting things our country is embarking on. 

FITZGERALD: Thank you Deputy Prime Minister. So, I might throw to the delegates and their questions from the floor. I give fair warning, but we're going to move the conference next year to late September. So depending on the fortunes of Geelong, there might be no discussion on submarines. 

MARLES: That's a very distracting time of year. 

AUDIENCE QUESTION: Deputy PM, Russ Crane, I chair the Defence South Australia advisory board. Thanks for your time this morning on a particularly busy day, I'm sure. I was really pleased to see you mention about defence industry and the work that's happening in that space, particularly Pillar I, but Pillar II of AUKUS as well. My question is perhaps two parts in both of those areas. Firstly, I'd be keen to understand your impression of the work that's going on in the ITAR space, so export licensing. Defence industry is very focused on that. And the other thing that they're very focused on is security clearances. These are two significant challenges, not only for SMEs, but for primes who are looking to looking to attract the workforce to do the work that they need to do. There's a bit of time, but I'd be keen to understand how you perceive that is progressing currently, and in what way. 

MARLES: That's a really good question. So, let's answer in the way you've asked. I perceive it as going well, in the sense that, to take ITAR, if you look at what has been done at a legal level and at a government-to-government level, we are clearly changing the law between our two countries in respect of making it much easier for information and tech to transfer between our two countries, but if we're being honest, particularly from America to Australia. I'm very mindful– it's not easy to say that, a lot of work has been done to get to that point, but I'm very mindful I am seeing this from a particular perspective. The answer, ultimately is not so much– well, it is in part what I perceive, but it is also what industry perceives. And that I perceive it, what will give me real confidence is if, if what we are seeing from where I'm sitting is reflected in terms of what the experience is on the ground. And I think there is a real risk here, which is what I'm alluding to, that you kind of make these changes at a policy level and legal level, but do things actually change on the ground? That's the question, right? I think, this bit I don't know, I think people are experiencing difference, but again, this is kind of where we really need to know from industry, is the difference that we have legislated being felt like? Is it actually making it easier to engage into the US and to take tech back? And if it's not, and there are things in the way, what exactly is it? Because we need to go and cut that stuff now. So we’re really reliant on industry to give us their perception of this issue. We really do need to be seeing this from kind of both ends of the scale. 

And in a way, that's a similar answer in respect of security appearances. I mean, we're very aware of the issue, steps have been taken to speed up the process, but like, we really do need to know how is that playing out on the ground? Are you seeing a difference? And if you're not, step us through with granularity where the blocks are, because we need to get past those. 

To state the obvious, we must solve both these issues if this thing is going to happen. And so, we're aware of it, we feel we've taken the steps we need to take, but I've got enough experience to know you can do that and then people will come to you and say, what's happened here? We need to know. And I think we need to really chase this thing right down to the ground. 

FITZGERALD: I think we run out of time, you need to get back to Parliament. 

ENDS