Press Conference, ADM AUKUS Pillar II

SUBJECTS: Defence funding, Infrastructure Investment Program, Defence Strategic Review

MINISTER FOR DEFENCE INDUSTRY PAT CONROY: Good morning, everyone. It's a pleasure to be here to help officially open the 2025 AM Congress and the welcoming remarks were actually right, this is a particularly interesting time to be involved in strategic policy and the Defence industry. 

I begin by acknowledging we meet on the land of the Ngunnawal people and pay my respects to their Elders past and present and emerging and I pay my respects to any veterans in the room today. 

I'm not going to give a big form speech. I'm going to run through a bit on what we've achieved and what we think the next few years would look like if a certain event turns our way in a few months' time, but I'm more interested in answering the questioning from the floor and from what Ewen has already flagged that he's interested in discussing with me. But I'll start with a few stats to put on the record where we are in terms of the defence industry in Australia. 

Acquisition spending is up by 16 per cent from $14.4 billion to $16.7 billion, a record. Sustainment spending is up by 12 per cent from 14.5 billion to 16.3 billion. At least [indistinct] of acquisitions sustainable spending funding last year was spent with Australian industry, that's $22 billion. That is the highest amount ever spent on the Australian industry and I should be very clear that thanks to reforms we've instituted and implemented by Fran Rush, we now look through ABNs to the actual locus of economic activity so that's a genuine $22 billion spent on Australian industrial activity in this country. 

Last year, we signed more than 19,000 contracts worth $26.1 billion with the Australian industry, up by more than 12 per cent on the previous year. And fiscal year '22/'23, the contributions of the defence industry to the economy grew by 4.1 per cent from the previous year and direct employment grew by 4,000 jobs and we now have around 100,000 Australians working in the Australian defence industry.

So, the aggregate figures are there. That does not mean that every company is winning the tenders that they want to win and I want to be very clear and recognise that. But from any objective measure, and as I said record stand in the Australian defence industry, this government is committed to giving the Australian Defence Force the equipment it needs to defend this country and we are committed to maximising the scheme in Australia to develop and sustain a sovereign and independent Australian defence industry. 

And if I can just reflect on a few of the key decisions that we've made over the last two and a half years, or thousand days, we've had the Defence Strategic Review, which is the fastest review into our strategic settings outside of war time. That flowed through to the 2024 National Defence Strategy and the 2024 Integrated Investment Program, which allocated an extra $60 billion to the IIP over a decade, so IIP is at $330 billion. 

As part of that, we did make hard decisions. We made hard decisions to fulfil the priorities in the DSR and also deal with a very [indistinct] over‑programming and [indistinct] projects so we moved from an IPP with over 500 projects to a number of projects in the high 200s. 

As part of the DSAR and NDS, we've pursued the strongest and I think most significant transformation of the Australian army since the 1960s. That includes a focus on long‑range strike with the army moving from its longest‑range weapon being 40km to one in excess of 500km, moving to 1,000km and the transformation of the army to one focused [indistinct] and I'll come back to that point in a second.

Complementing the NDS was the Surface Fleet Review which recommended and the government accepted a plan to more than double the size of the service combative fleet. We are moving from a service combative fleet where the previous plan would have us with 11 major service combatants to a plan of 26 service combatants and complementing that was the speed of that delivery and, again, I'll talk to that in a second. 

Accompanying that more than doubling the surface fleet was a commitment for the first time in the history of the nation to continuous native ship‑building in WA to complement the continuous native ship‑building in SA. 

I also released the GWEO enterprise plan last year which represented a $21 billion funding commitment as part of a $74 billion funding commitment in targeting long‑range strike and missile defence. We will establish two missile factories in this country and as part of that establishment of those two factories, we've allocated $500 million to grow out the Australian supply chain. 

So, yes, those missiles we're building in association with global primes, but we've allocated significant resources to actually grow the Australian Defence industry, providing critical componentry in some years into those missiles, as a concrete, realistic plan to grow our Indigenous missile industry so that it can move into producing things like hypersonics all being part of the coproduction of a precision strike missile. 

We've announced a preferred partner to produce 155mm ammunition and, importantly, with both that and GMLRS and enable a joint‑strike missile. We're not building factories to meet our current needs, we're building in greater scale to either support allies or partners or be able to scale up if we need greater ammunition. 

We've got a request for interest out there for our rocket [indistinct] prime, to work and development a rocket [indistinct] prime working in Australia. 

We've also established the Advanced Strategic Capabilities Accelerator, ASCA, and allocated $3.5 billion to really drive defence innovation. It's moving at speed but importantly we're learning from lessons and we're learning from feedback from industry about how we could make more effective. We announced two weeks ago that we would be moving ASCA as part of the Vice Chief of the Defence Force's Department of Defence to really position it next to the war fighter and deal with the focus on our capability needs and that's the direct feedback from industry. 

Early last year, we released a defence industry development strategy that had a number of focuses. It focused on exports and for the first time talked about how we would drive government‑to‑government agreements to drive exports and that was obviously part of us negotiating the largest defence export deal in the history of the country with the Boxer export to Germany. It focused on significant procurement reform, building on the six reforms that I announced with the DPM in 2023 ‑ sorry, late 2022, and set out the sovereign defence national priorities which, for the first time, detailed at very granular level what are the sovereign capabilities that we want the defence industry to focus on across all three epochs and articulated the decision by government that we would intervene with an IIP to sustain those [indistinct]. 

All part of this is our plan to deal with the strategic circumstances that we faced and that involved very hard decisions but involved also taking strong action to bring forward capability that was necessary. We brought forward the provision of new frigates for the Royal Australian navy, such that the previous plan was one new frigate in 2034, we'll have four new frigates by 2034 with the first delivered in 2029. 

We brought forward landing craft medium by two years, landing craft heavy by seven years. We brought forward infantry fighting vehicles by two years. We'll be producing missiles in this country 10 years earlier than the previous plan. We brought forward the acquisition and delivery of HIMARS and the delivery of Tomahawk cruise missiles such that we're the third nation in the world to have the ability to deploy a Tomahawk cruise missiles. 

So, this speaks to the strategic urgency of the government and also recognises that we make hard decisions and we want to work with you in partnership and be honest and transparent about that and work with you to focus on what the ADF needs to give it the capability and edge it requires. 

Now, ladies and gentlemen, you can't do any of this without sufficient funding for Defence. Otherwise, it's just empty talk. And that's why accompanying these plans, accompanying the NDS is a $50.7 billion increase in the Defence Budget. $60 billion increase in the IIP supported by a $50 billion increase in the Defence Budget overall. This is the most significant increase in the Defence Budget [indistinct]. Importantly, that is a $50 billion increase against the previous trajectory, which was already [indistinct] so there's a $50 billion increase. 

And importantly, $5.7 billion of that was in the initial forward estimates and another big chunk of money will flow into the forward estimates when the budget is delivered next month. 

So, these are all significant investments in the defence of the nation. In my time remaining, I just want to flag ‑ but some marks in the sand about where I think the priorities are in my portfolio if we are successfully re‑elected and that is obviously up to the Australian people. 

First, it's to focus on implementation of the policies and strategies we've announced. The Defence Industry Development Strategy is a fine document, but it's got probably 75 per cent in common with almost every other industry statement from ministers in the Defence industry over the last 20 years. The key is delivery of that and every other document and the key to that continuity. We have a great opportunity, subject to the will of the Australian people, to have continuity in the Defence portfolios, to have continuity in Defence policy which really will allow us to drive cultural change and continue that [indistinct] agenda. 

So, it is all about implementation, implementation, implementation. But we'll also look at further procurement reform. I've been very clear with Defence that we still aren't sharing enough information with the Defence industry in classified briefings. Our security situation at the moment dictates that we can't share as much information in the public arena that we previously would have 20 years ago but we need to provide more information to trusted partners in the Defence industry about what is the investment plans, what are the opportunities over the next 5, 10 years, and I recognise that the classified briefings can do a better job at delivering that information to customer partners so they can make investment decisions. 

Honestly, I want to see a stronger commercial focus in the Department of Defence, particularly the delivery agencies I'm partnering with Chris [indistinct] and the other delivery managers to make that happen, including through contract and reform. We want to encourage more risk‑taking. I want to see more capability discipline by the capability managers. We need more discipline around requirement‑setting and follow‑through so that we don't see project unnecessarily changed in the delivery phase which, as we all know, is one of the key drivers of scheduled pressure. 

And, finally, I want to see greater focus on driving Defence exports and I'm hoping to make some announcements in the near term about where we're going there to support you to export to the rest of the world, recognising that while our Defence budget is growing, we don't always have the scale to sustain Australian Defence products and the best way of supplementing that is through global supply chains and other export initiatives. 

But I just want to give you a quick picture of where we're heading and what our focus is and what we've achieved over the last two years. I want to finish on a point coming up. You can't do any of this without continuity and you can't do anything ‑ any of this without funding continuity and the last thing I want to see is for Defence to be a political football in the upcoming election. I know you've got Andrew Hastie speaking to you later in the day and I respect and like Andrew, he's a true patriot committed to serving his nation, as he has done for decades. But we do have a challenge. We've got a challenge which is at the moment the stated policies of the alternative government is to cut the Defence Budget by $50 billion. 

Angus Taylor has said so repeatedly, that, and I quote, "We've said that the Defence Budget should be within the envelope that's already been established," and he's referring to the 2022 trajectory. And as recently as yesterday, we had Senator Price, the Opposition's efficiency spokesperson, saying ‑ and I quote ‑ that she'd be looking for "efficiencies right across the board" and she's taking "a fine‑tooth comb to [indistinct] portfolios such as Defence." 

So, I don't say these things to make a political point. I say these things to say that we need your help to work with Andrew Hastie to get them to match our funding commitments. I don't want Defence, quite frankly, to be a political debating piece in the election and the best way of doing that is to have both sides of politics having the same funding commitments and at the moment one side's not committed to that extra funding to get Defence over 2.3 per cent of GDP and that's a real challenge for all of us because that will be massively disruptive to the Australian Defence industry, should that come to happen. 

So, I wish you the best of luck for today, look forward to the questions and responding to your issues. More importantly, I look forward to working with you, whether it is over the next couple of months or over the next few years to really continue to grow a sovereign Australian Defence industry capable of helping make Australia safer and giving the Australian Defence Force the equipment it needs to help protect all of us. Thank you very much. 

SPEAKER 1: ...for issues such as the ABN's 30 Under 30 awards and a range of conferences on Australian strategic policy, defence industry policy and private financing of defence capabilities. UN also advises on defence issues and has direct channels to key decision makers in Australia's national security community so it's ideal to sit down now [indistinct] to have a chat with the minister about his talk today. Thank you. 

SPEAKER 2: So, I had some remarks that I was going to say before we spoke for those who don't know me, I'm Ewen, I’m the publisher of ADN Group. You may not know that ADN is a part of Yaffa Media which is a parent organisation, Yaffa is celebrating 100 years this year. It's remained family owned and operated that whole time and you're going to hear a little bit more when [] when Tracy Yaffa who  joins us today after the tea break so I encourage you after morning tea to come back here and hear a little more about that. 

But on to business. Pat, I found it interesting that you mentioned thousand days because I mentioned that last year at the average length of time that a defence review lasts before it's superseded by another review. So, no‑one's counting but there have been 667 days since the [indistinct] of the DSR. I think you've got another 300 days or so to deliver the promises of that before you reach that thousand‑day milestone, and we’ll have another check in. And see what that's come to fruition, whether we're still on the path to becoming a focused force, and what's the capability included in that time thousand‑day timeframe. 

My first question, I'd like to open with events from last night. This is a slight change of tack from [indistinct]. The government has previously described its support to Ukraine as "unwavering". We've seen last night that the US's support of Ukraine is wavering. Will our support also waver? 

MINISTER CONROY: The short answer is no. I'm not going to reflect on the other parts of your question and reflect on other countries views or your characterisations of that which I don't necessarily agree with. But what I can say from an Australian point of view, our position is that we support Ukraine to end the conflict on their terms. That is our position. It remains our position. We're proud and privileged to be the biggest non‑NATO [indistinct] assistance to Ukraine. I had the privilege of attending the NATO IP4 Defence Ministers meeting in Brussels late last year where I announced Australia would give [indistinct] to Ukraine so we'll continue to talk to the Ukrainian government about how we can support them and add value and resistance to Vladimir Putin's illegal, immoral invasion.

SPEAKER 2: I'll just encourage everyone as well, I have questions coming in through the digital app, you can find access to that [indistinct] so I'm using your questions here. Please keep those coming in. The top one here we've got, Pat, is, "Will the consultant contract [indistinct] continue [indistinct] election?"

MINISTER CONROY: Look, our plan is to continue to build capacity and capability in the Department of Defence. Contractors and consultants do have a strong role to play and it is really important to acknowledge that they are an important part of the Defence ecosystem but I'll also be very frank with people, which is that under the ‑ before we came to power, Defence was losing capability to maintain artificial restrictions on a number of public servants and that was leading to poor outcomes because Defence didn't have the capability it needed to be a smart customer. 

It is incredibly important that you have a smart customer department. We are committed to rebuilding capability within the Department of Defence and without being [indistinct] when people talk about 136,000 public servants, that means cutting the Department of Defence and cutting the ability of the Department of Defence to partner with the Defence industry to make this country safer. 

SPEAKER 2: The USA was provided much greater detail than expected to defence procurement, give or take into account security needs. This is a question I asked you I think last time we spoke. You committed then to transparency [indistinct] what will you do to improve transparency further to [indistinct]. 

MINISTER CONROY: Well, I don't necessarily agree with how you presented that. I think we have improved in some domains, so we've been very clear the strategic service [indistinct] changed and we can't have information out there that was containing, for example, 2009 public DCP, so we do two things. One, we're committed to developing and establishing a parliamentary defence committee along the lines of the parliamentary joint committee on intelligence and security that receives classified briefings and holds intelligence agencies to account through the Parliament of Australia. That's incredibly important to give citizens confidence that Defence is being scrutinised at the most classified level. 

The second part of that is to have regular and detailed industry briefings in a classified environment, so that trusted partners can understand what our investment priorities are and where we're asking them to partner with us. We launched that process after the '24 IIP. I've had mixed feedback from industry about ‑ some have been good, some have been less than good and I'm working with Chris and the other delivery managers and, to be quite frank, the capability managers as well, to make sure that we get a good process in place so industry have the information they need so that they can make those investments. 

SPEAKER 2: So, 667 days since the DSR. In the interests of transparency, Pat, when will you announce the Sea 3000 decision? 

MINISTER CONROY: We're on the timeline that we announced when we announced this project which is a decision on that will be made before the end of the year. So, I know there has been a little bit of speculation that things are slipping. They haven't slipped one iota. We are on track to make a decision by the end of the year and it's completely consistent with delivering the first frigate during 2029. 

SPEAKER 2: Is there a reason that the two bidders for Sea 3000 haven't been speaking to journalists? 

MINISTER CONROY: No, again, sometimes I find this frustrating that some of the [indistinct] Defence has not changed their policy on how bidders in the defence industry can interact with the media. There's always been a prohibition, and Chris will correct me if I get this slightly wrong ‑ there's always been a prohibition on Defence companies talking about specific aspects of their tender but there is no prohibition on Defence companies talking about what they've produced for other navies or their other capabilities. 

So, the two bidders can talk about what they've delivered for ‑ whether it's the Egyptian navy for one of them or the Japanese navy for another ‑ there is no prohibition on that, and I think that that's really important to say that. 

SPEAKER 2: So, they can go back ‑ I can approach TKMS and Mitsubishi and they'll be allowed to talk? 

MINISTER CONROY: They can talk about what they've provided to the Egyptian and Algerian navies to their hearts' content. They can talk about their capabilities. What they can't do is refer to specific aspects of the tender which, quite frankly, that isn't [indistinct] commercial position and as a guardian of taxpayers' dollars, I won't do anything impacts on our negotiating position. 

SPEAKER 2: Does Australia have a reputation for a [indistinct] degree of sovereign risk following a number of strategic reviews? How will you address that? 

MINISTER CONROY: Well, I don't think that ‑ I reject the premise of that question, Ewen. I think that it is incumbent upon us to have regular planning and review cycles and we would be the first government to actually put in place a regular pattern of that that people can expect. So, rather than having a random White Paper when you've got a change of government, change of minister, we had 2000, 2009, 2013, 2016 and 2020 ‑ there's no pattern there ‑ we've said that will adopt the plan cycle of a '24 NDS then a '26 NDS and then a '28 NDS with updates to the IIP and you have it as an evolving planning cycle where you have continuity and what you see a changes around the margins rather than significant rewriting. 

I think that's really important for industry but for the general defence of the nation, to have that predictable plan cycle. The US have had, correct me if I'm wrong, 4‑year planning cycles for a long, long time and that served them well. 

SPEAKER 2: [Indistinct] how is the government applying [indistinct] 

MINISTER CONROY: Appreciate the question. I can field this one. Contracting [indistinct] full stop. So, we've reduced the amount of paperwork required for a contract by about 50 per cent and we're trialling new [indistinct] and the first one is AIR6500. Secondly, as articulated in the DSR, we're embracing the concept of minimal viable capability, recognising that the last 15 or 20 per cent of capability often takes up a disproportionate amount of the time and budget and 80 per cent of something is better than the old system, so embracing minimum viable capability is critically important. 

Thirdly, we're embracing strategic partnerships where it makes sense. Competition is important to guarantee value for money and to give new entrants an opportunity to demonstrate their wares but in certain areas strategic partnerships make sense. Long‑term partnerships give industry the security they need to make long‑term investments in their capability and it also recognises [indistinct] of the Australian industry. 

So, for example, we've started specifying certain projects ‑ no matter who wins, they'll partner with CEA, for example, to provide the radars. That's one example. We've got a strategic ship‑building pilot being negotiated in WA. That's another example. 

My final point is that the ASCA model is something that we're intent on working perfecting, which is all about rapid procurement and we recognise that when we started that process that ASCA probably could have done a bit better in communicating with industry, recognising that after a yes, a fast no is the second‑best answer, and so we're getting them more resources around rapid procurement contracting ability [indistinct]. 

SPEAKER 2: [Indistinct] someone in the room has a proposal for consideration by ASCA. Will that evaluation be impacted Aster's shift from DCG to PCF?

MINISTER CONROY: I might get their details to double‑check. I sat down with Hugh Meggitt to talk about heat priorities, but to the best of my knowledge we're continuing with all current plans and then just focused on moving faster and responding to capability needs of the war [indistinct] but if that person can maybe grab my team ‑ Andy, stick up your hand ‑ if you approach Andy, but to the best of my knowledge, from my discussions with Hugh, he's talking about future issues rather than changing within the current [indistinct]. 

SPEAKER 2: Without rejecting the premise of the next question. 

MINISTER CONROY: I sound like a politician. 

SPEAKER 2: You did say [indistinct]. AUKUS [indistinct] I think it's undeniable that an economy size of Australia is going to have great difficulty operating a fleet of nuclear‑powered submarines and Defence Force simultaneously. So, [indistinct] priorities like integrated air and missile defence, AIR6500 and, 6502 and 6503 that China's [indistinct]. 

MINISTER CONROY: Well, there's been no change to the AIR6500. We're continuing with that at length and, as I said, we have allocated $74 billion to long‑range strike targeting and integrated missile defence. We made it very clear that we wanted to focus on the range of the system at the moment which was AIR6500 and recognising that we have brought forward key elements of air and missile defence, so, for example, we brought forward the acquisition of SM2 and SM6 missiles.  We're only the second nation in the world to successfully test‑fire an SM6 missile and we're acquiring a significant amount of them so it's not true to say that our integrated air and missile defence has taken a backward step. 6502 is still something that we're contemplating but we're focussing on 6500, which is the [indistinct] system, getting that right, and investing in the effectiveness and a layered approach. 

SPEAKER 2: On that, the current capability [indistinct] you talked about how the budget has increased, how do you reconcile that historic ‑ or that budget increase with the concern that this, I think, [indistinct] that in 5 to 10 years the ADF will largely go to conflict with the force that it has today? 

MINISTER CONROY: Well, I just don't think that's born out in the facts. As I said, we're delivering [indistinct] two years earlier, beginning of 2026. We've brought forward major craft [indistinct] by seven years, delivery 2028. All our infantry fighting vehicles will start being delivered in 2027 and we have completed the run before the previous government's plan would be at the start of their run. 

We brought forward Tomahawks, we brought forward SM6, SM2, we brought forward HIMARS. So, we brought forward significant capability into the next five years. We brought forward missile manufacture by 10 years. So, this claim that if there's a conflict in the early 2030s ‑ and I am always very careful to talk about hypotheticals as a minister ‑ but if there's a conflict in seven years' time, we've brought forward massive amounts of capability and we'll continue to focus on that. 

And the frigates ‑ the frigates are the poster child. Under the previous plan, one new frigate 2034, under our plan, four new frigates by 2034. 

SPEAKER 2: [Indistinct] 

MINISTER CONROY: Well, this is ‑ I think that's a bit of a cheeky question here. [Indistinct] that's just your job but this is the fastest procurement of a large capability in peace time. So, we only announced Sea 3000 in February last year and we down selected from the five options to the two options within 12 months, in fact, it was 10 months. And then to take up to another 12 months to actually finalise that, I think it's quite reasonable for a project that has an initial allocation in the IIP of $10 billion. 

So, I think to go from announcing the project to announcing the successful partner within a year and a half ‑ a year and a half, maybe a year and nine months ‑ and to have the first one delivered within four and a half years is light speed in Defence. That's light speed. 

SPEAKER 2: Another cheeky question then. We've noticed that the ADM top 40 results [indistinct] the last 10 to 15 years, the ambassador of money going to the primes has grown quite significantly, the amount of money going to mid‑size [indistinct] companies SMEs has largely levelled off. What initiatives has been implemented by Labor to arrest the access of [indistinct] on Australian Defence industry? 

MINISTER CONROY: I love the top 40 reporting. I read it every year. I will only indulge this if you're very transparent. You'll do the transparency you want me to have. That a number of companies didn't respond to the top 40 this year and I don't think it's fair to have comparisons between years because you don't have the same companies responding each year in the top 40. 

Look, I can just respond by saying we've spent record amounts in the Defence industry, $22 billion in the last year. We're upping that spending. More importantly than the money we're spending, we're taking concrete initiatives to make sure that money flows through. 

So first off, the reform to how we measure that, so if you look through ABNs to actually [indistinct] economic activity, we've doubled the number of companies participating in the global supply chain so Australian SMEs have a real opportunity to win [indistinct] work. We've removed this ridiculous restriction on which Australian companies could be part of the GEC. Previously, to be an Australian company participating you had to have fewer than 200 employees. We want to grow Australian medium sized Defence companies, so that's another issue. 

We're also trying contractor methods. So, for example, when I announced regional maintenance in the east, multibillion contract with Thales, one of the contract provisions we're trialling there is they actually permission from Defence to bring in‑house work that they've previously done in their supply chain. We're trialling that to see whether that leads to stronger defence SME ecosystem. So, we're doing a number of initiatives there. ASCA is very much focused on SMEs and focused on putting those capabilities into production so they don't die in the valley of death. So, we're doing a number of initiatives and look out for some more announcements in the near future around that but we're spending record amounts in the Australian Defence across both primes and SMEs and we'll continue to focus on that. 

SPEAKER 2: Given you're [indistinct] would you encourage an industry that may not have responded to the top 40 to respond? 

MINISTER CONROY: I always encourage more information out there and that's why we established [indistinct]. 

SPEAKER 2: On that note, ladies and gentlemen, please thank Minister Conroy.

ENDS