Doorstop Interview, Perth

SUBJECTS:  Supporting Australian Defence Industry; AUKUS; Henderson Defence Precinct; Defence Funding; Austal; General Purpose Frigate Program; Collins Class Submarines. 

TREVOR RAMAN, VEEM: Good morning. We would like to extend a very warm welcome to Minister Marles, Deputy Prime Minister, as well as Matt Keogh and Sam Lim and also welcome our industrial partners, HII.  VEEM has been supporting the Collins class program for the last 30 years. And to that end, we provide all the nickel, aluminium, bronze high precision castings into the Collins class program. That put us in good stead when AUKUS came about to get ourselves onto the supply chain to support the AUKUS program. And whilst we were exploring that, we found that there was a greater need for the entire US submarine base, that got us to the point where we started talking to members of the US supply chain for their submarines, and through a year-long journey, we've got ourselves to the point where we are today, where HII have announced that they have introduced the AUSS‑Q program. VEEM is fortunate enough to be one of the first West Australian companies to be chosen to be a part of that program, and we look forward to the very near future where we can be a part of the American submarine supply chain.

TIM BROWN, HII: Thank you. It’s great to be here today in this beautiful Perth weather, and to be in the industrial heartland of Western Australia. HII is the largest military ship builder in the United States, and the AUSS-Q program is a program about uplifting and qualifying suppliers to feed into the United States Virginia submarine class program and working with companies like VEEM here to be able to achieve that have already proven their pedigree in many ways. But this program is not just about uplifting suppliers, because Australia's got great capability, it's really also about expanding the capability of Australian industry to support the long term endeavours of the AUKUS program as the nation starts to mobilize to support AUKUS overall. So thank you very much for today, and thank you to the Government, Deputy Prime Minister for supporting this program, which is going to be a critical part, as I said, of the industrial mobilisation of the nation. Thank you. 

SAM LIM, MEMBER FOR TANGNEY: Good morning, everyone. How are you doing? I'm Sam Lim, your Member of Parliament for Tangney, and today I cannot say enough, I'm very very proud to have two Ministers with me here, left and right, and I'll let them talk. Thank you.

RICHARD MARLES, DEPUTY PRIME MINISTER: Well, thank you for that, Sam. Look, it's great to be here with VEEM and great to be here with HII and to be here with Matt Keogh, the Minister for Defence personnel and veterans affairs, but obviously a very proud Western Australian. And also here with Sam Lim, our tremendous member for Tangney, and to be here to speak about the Australian Submarine Supplier Qualification Pilot program, which is being run by HII and which VEEM is now in the final stages of. HII is America's largest naval ship builder and what it is doing through this program is qualifying Australian companies to participate in the supply chain of building US Virginia class submarines. And this really speaks to one of the great opportunities of AUKUS, because at its heart what AUKUS is seeking to do is to establish a seamless defence industrial base across the three countries; Australia, the United States and the United Kingdom. So that the industrial base of all three countries can be used for the benefit of all three countries. We know there is a real challenge in the United States right now in terms of increasing its production rate of Virginia class submarines and its sustainment rate of Virginia class submarines. Having Australian companies qualified to participate in that supply chain will help in that endeavour. This is really important for the United States and it's really important for Australia. Getting that production rate up in the US is key to Australia acquiring its own nuclear‑powered submarines, its own Virginia class submarines in the early 2030s but this is such a great opportunity for Australian industry. And today we've been taken around VEEM, which is a very cool company, which does precision castings, complex components, components currently on the Collins class submarines such as valves. But indeed, VEEM supplies components to a whole range of assets within our Navy, not just the Collins class submarines but our surface vessels as well. So VEEM has a long history of engaging in defence work and in maritime work but this offers the opportunity for VEEM to be qualified such that it can contract directly with HII in the United States, and indeed, Electric Boat in the United States, the two makers of the Virginia class submarines. It's a huge step forward for VEEM, it's a huge step forward for Australian industry. But what's really important about this in the longer term, and this is the critical goal, is VEEM being qualified to supply onto the Virginia class program in the United States is a pathway to also supplying into the Astute class program in the United Kingdom. But fundamentally is so important in terms of building the supply chain in Australia so that we can make our own submarines here at the Osborne Naval Shipyard in Adelaide. And the important point to make there is that whilst that was where these submarines will be assembled, what's completely evident when you look at a place like VEEM, is that to build submarines in Australia means activating the industrial base right across the country, including here in Western Australia. So we're just so excited to be here on this day to see the progress of VEEM to work with HII in what they're doing to qualify Australian industry, and this is a tangible step forward in the story of AUKUS. This builds our national military capability, but in the process, we are building our national defence industry capability and providing high skilled, high paid jobs.

MATT KEOGH, MINISTER FOR DEFENCE PERSONNEL: Thanks Richard, and I’d like to thank VEEM for hosting us here today as well. It's been great to be out with Sam Lim because what we see here in VEEM is an important demonstration of the significance of the Western Australian defence industry, not just for WA, not just for Australia, but in fact, supporting a global supply chain. And what we see here is that so often people talk and focus on the resources industry in Western Australia, VEEM is a key part of supporting that resources industry, but also the growing defence industry here in Western Australia, which is about setting up advanced manufacturing, more broadly, developing our skills base but also intergenerational jobs into the future. And this is fundamental to understanding not only our approach to supporting Australian sovereign capability for our defence force, not only our plans for future made in Australia by supporting advanced manufacturing, like businesses like VEEM, but also about supporting Western Australia. Apparently, Peter Dutton has decided to roll into Western Australia. He hasn't been here since late January, and we understand he won't even be engaging with the community or even with the media over the course of today. It's clear through his actions, his lack of engagement with Western Australia, that he doesn't understand the important issues confronting Western Australia. He failed to support the Albanese Government's approach to supporting the growth of a critical minerals industry here in Western Australia. He's failed to support the growing of a future made in Australia approach and supporting our advanced manufacturing industries. And he's failing to support WA on the GST. Our Prime Minister has been to Western Australia 29 times. He stood up to protect Western Australia's GST. Peter Dutton is on the record of being opposed to that GST deal. He's now come into Western Australia. We understand he's doing some sort of launch with a candidate, but apparently he doesn't want them to meet the media which is quite strange. But if that's how he wants to engage or not engage with Western Australia, that's fine with us. I also have a question for Peter Dutton, are you going to be meeting with Libby Mettam, or are you going to be meeting with Basil Zempilas as the leader of the state Liberal Party here in Western Australia. Meanwhile, we'll continue to do the important work of supporting businesses here, like VEEM, the defence industry in Western Australia, which is such an important part of our growing economy and diversification in Western Australia, growing those jobs for the future intergenerational employment, as well as supporting our sovereign capability here in Western Australia and nationally, to support the important work that we need to do in growing our defence capability more broadly. And I'm so pleased that we're able to have businesses like this doing such advanced work supporting defence, supporting our allies and supporting our resources industry here in Western Australia. 

MARLES: So we might take questions and if we can, just to start with, if there are any questions on this program.

JOURNALIST: I understand about the program, it was actually, I think Paul Papalia, our local minister, announced a few weeks ago that there was a pathway, if you like. But I just want to ask the obvious question, which is that there's still no guarantee that AUKUS is even proceeding. So how does that fit into everything that's going on at the moment?

MARLES: Look, if you look at all that has been said in relation to AUKUS across three countries, all of which have changed their government since the time that AUKUS was first announced. There is only positive comment about AUKUS and a commitment to pursue AUKUS. When I met with my counterpart, Secretary of Defense, Pete Hegseth, his comments were entirely positive about the future of AUKUS and the engagement of the Trump Administration in respect of AUKUS. And that makes sense, because AUKUS is a really good deal for all three countries that are involved, and to get into what we have announced today, and why this is evidence of that. You know, the great challenge in the United States now is to increase the production rate of Virginia class submarines. That is really important from an Australian point of view, as I said earlier, that's important in terms of the acquisition by Australia of Virginia class submarines in the early 2030s but it's fundamentally important for the United States in terms of having a great availability of its own Virginia class submarines. The qualification of a company like VEEM to participate in the American supply chain in relation to Virginia class submarines is a really important step in terms of increasing that production rate in the US. That's actually what you're witnessing here right now, in terms of what we are talking about, what we are announcing about the work that VEEM is doing. VEEM’s work here under this program, is about increasing the US production rate of Virginia class submarines. So of course, the United States is going to be supportive of that. It is in their interest, and they have consistently voiced their support. 

JOURNALIST: But you haven't got a cast iron guarantee, have you, Minister? 

MARLES: We've got a treaty level agreement between the three countries in relation to AUKUS, you can't get a stronger commitment than that. And we have consistent comment from and not just comment action from the Trump Administration in support of AUKUS and in support of the treaty level agreement which now exists between Australia, the United Kingdom and the US. So I mean, actually, the assertion that you're making in the question isn’t correct.

JOURNALIST: Well, did you ever think we'd have tariffs?

MARLES: As I say, it is a separate question. And what we have is a treaty level agreement and a government which is in the United States, which in respect of AUKUS, is acting in its own interest, which is exactly what we'd expect it to do. 

JOURNALIST: Outside of the treaty agreement, what reassurances have you had personally in your role as defence minister, guaranteeing that those Virginia class submarines are going to be delivered on time? 

MARLES: As I said, I met with the Secretary of Defense just over a month ago in Washington, the first overseas counterpart that he met with as a defence minister, and AUKUS was a critical part of the conversation that we had. And you can just go back to and look at the comments that Secretary Hegseth made on that day in support of AUKUS, the elements of it and the Virginia class submarines coming to Australia are a part of it. But again, I understand that I will consistently be asked these questions, and probably will be for years to come. But look at actions. At the end of 2023 legislation passed the United States Congress, which enabled the sale of the Virginia class submarines to Australia. That legislation was supported by Democrats, but supported by Republicans and Trump Republicans. It was supported across the political spectrum in the United States. It is in the US’ strategic interest for Australia to have this capability. It is in the US’ own interest to have Australia contributing to its industrial base, which we are doing. It's in the United States’ interest to have a company like VEEM able to contribute to the production of Virginia class submarines, so that that production rate can increase. This is a good deal for the US. Obviously, a great deal for Australia, but this is fundamentally a good deal. 

JOURNALIST: Malcolm Turnbull says it's a bad deal. 

MARLES: Well, former Prime Ministers have a right to have their say. Respectfully, I disagree with Malcolm Turnbull, and it's not a surprise to hear those words from Malcolm Turnbull. One thing is, he's been consistent about this from the moment that we announced the optimal pathway back in March of 2023. Malcolm Turnbull will say what he says, this is a fundamentally critical moment for Australia. It's a critical deal for Australia, because what this does is give us an evolving capability, in terms of our long-range submarine capability, which, for a country like Australia, is profoundly important. 

JOURNALIST: Does the deal still have support from your own party? 

MARLES: Of course. I mean, the Government has been consistently supporting this. The Federal caucus has been consistently supporting this, and indeed, this was a matter that was debated at the National Conference of the Australian Labor Party and overwhelmingly supported there. So at every level, this has been supported by the Labor Party and the Federal parliamentary Labor Party and the Albanese Government.

JOURNALIST: There have been suggestions of splits within the party, though, is that concerning? 

MARLES: Well, I've not actually heard those suggestions, to be honest, and I just don't think that's correct. I mean, we're completely unified around what we are doing here and you can look at every step we have taken. We have been moving this forward at a pace. What's critically important with AUKUS is we are doing something the nation is doing something very big. This is the biggest industrial endeavour in our country's history. In military terms, it is probably the biggest step up in our military capability since the establishment of the Navy itself. And it really matters that we are pushing forward, making every day count and meeting every deadline, and that's what we're doing, and that's what this Government's been doing. 

JOURNALIST: In your approach, as you say, are any of your eastern states members of the party putting up their hand to host a submarine base, and are you ruling out the concept of an east coast base? 

MARLES: The concept of an east coast base was one that was looked at and assessed in the Defence Strategic Review. In the longer term, we will need an east coast base. But as we have said, that is a decision that you know, is around 2030 and beyond, in terms of where that would occur. And we are focused on the steps in the process that we need to be dealing with now. And East Coast base is not one of them. It will come in due course but right now, the focus is on seeing upgrades to HMAS Stirling here, getting the Submarine Rotational Force, or Stirling, ready for the establishment of the Submarine Rotational Force in 2027 making sure that we are able to host an increased number of visits from the United States’ nuclear-powered submarines. And indeed, USS Minnesota has been in our waters of late. And so that is where our focus is at, as well as working with West Australian government around establishing the Henderson Defence Precinct, and we will take every step as it comes and make sure that we are meeting those timelines, which we've been doing from the very beginning. 

JOURNALIST: Just on WA, there's obviously a lot of interest in WA. You mentioned HMAS Stirling, it's been announced that there will be a dry dock facility, obviously, where submarines will come, they'll be maintained and so forth. I think there was a figure of $20 billion I think put on it. Can you give us an update on that? Will there be money in the federal budget for that? Can give us any updates on that?

MARLES: So, are we done in terms of VEEM? I’ll come back to that. 

JOURNALIST: If Australia is going to be doing its part through companies like VEEM, is that another argument you can take to the Trump Administration to not have tariffs? 

MARLES: Defence industry is certainly a very important part of our engagement with the United States, it along with all the other components of our exports to the United States, or part of the arguments that we are making to the Trump Administration. Look when it comes to the question of tariffs, obviously, the decision that was recently made was disappointing, but we'll continue to make the argument to the United States around the benefits to the United States economy of that of our exports to the US being tariff-free. I mean what we are doing and this is a perfect example of it, where we're exporting to the United States, is actually supporting American jobs, and so that does form part of the continuing discussion that we'll have with the US Administration in relation to tariffs. 

JOURNALIST: Sorry. I just wonder if you give us an update on that project, because it's so important to WA of course. 

MARLES: Look, I mean, we are moving forward in relation to the establishment of the Henderson Defence Precinct and I signed an agreement with the Premier at the end of last year in relation to that, and it is a really important component of what we need to be doing. In time a dry dock facility is going to be necessary there, in terms of the overall defence spend, that's something that we continue to work forward with. But the additional $50 billion worth of defence spending, which is in the budget, which to this date, has not been supported by the Opposition, is there, and we will continue to interest the Integrated Investment Program, which is the 10 year schedule of defence spending which sits within that. We will continue to manage that so that we can develop the Henderson Defence Precinct. 

JOURNALIST: Sorry, is there any timelines for that project at all?

MARLES: Well, in terms of the Henderson Defence Precinct, we announced that when we did–  

JOURNALIST: Sorry, the dry dock– the dry dock would be at HMAS Stirling, is that right? 

MARLES: No– 

JOURNALIST: No it wouldn’t? So that would be at–

MARLES: At Henderson.

JOURNALIST: At Henderson, sorry. Is there any timelines on that?

MARLES: In the broader sense, I'm not going to go into years now, but we need to be developing a capability there which enables us to do the maintenance of submarines. And that is part of the announcement when we signed the agreement with Western Australia. So to be clear on that the maintenance of Australia's future nuclear-powered submarines will happen at Henderson. And so the timeline of that schedule really drives the critical infrastructure decisions that need to be made there.

JOURNALIST: So the $50 billion in the budget is that is the money for Henderson as part of that is it? 

MARLES: So the Integrated Investment Program, which includes parts of Henderson, forms part of the $50 billion. The $50 billion takes us forward 10 years. We're obviously talking about a time frame which goes beyond that, though, as well. 

JOURNALIST: Can I ask about Hanwha’s move to take a 9% stake in Austal? Are you concerned about what that might look to the Japanese and German contenders for the SEA3000 project?

MARLES: Look that ultimately is a matter between Hanwha and Austal, we are comfortable with where Austal is at. We've determined Austal as the strategic ship builder here in a pilot program in Western Australia, and we are comfortable with the ownership of Austal in relation to that. And ultimately, the question that you asked, of which I'm aware is really a matter between Hanwha and Austal and no, I don't think it has any implications. 

JOURNALIST: So you’re not worried about South Korean investment into Austal?

MARLES: Well, definitely not worried about South Korean investment. And nor do I think it has any implication in relation to SEA3000. 

JOURNALIST: It doesn't change the Government's intention to have that second stage of frigates built locally? 

MARLES: No, so to be clear about SEA3000, in SEA3000, we have down selected now to two tenderers. The intention is to make the final decision this year in relation to which is the successful tenderer. The fundamental driver of what we need to be seeing here is speed into service, into the Royal Australian Navy, of the first of the general purpose frigates. And that will see a build commence overseas, as we've announced, but we do want to see that build transfer to Australia, to Western Australia, to Henderson, as soon as possible. And that the bulk of the general purpose frigates will ultimately be built at Henderson forms a critical part of the Government's commitment to continuous naval ship building here in Perth.

JOURNALIST: Just one more on HMAS Farncomb, I believe, reports that Defence is considering scaling back its life of type extension. Is the Government still committed to that full LOTE? And are you concerned that a scaled back one could open up gaps in our defence capabilities?

MARLES: Our plan is to see a full LOTE on Farncomb. That's that is our plan at present, and that was firmed by the Chief of Navy at Senate Estimates a few weeks ago. But as I've said now on a few occasions, we have a challenge in relation to the extension of the whole class of Collins class submarines. When we came to government, after really a lost decade from the Liberals in relation to management of defence generally, and management of submarines specifically, we were facing at least a 10 year capability gap. I mean, there was no prospect of a new nuclear powered submarine coming into the service of the Royal Australian Navy until the early 2040s by the arrangement that we've now reached with the United Kingdom and the United States, an Australian flagged Virginia class submarine will be in service in the Royal Australian Navy, not in the early 2040s but the early 2030s but that does also then require us to extend the life of Collins, which when it was originally built, was imagined, would be coming to an end around now, in the 2020s. That is going to be a challenge. It's a challenge I think we can meet, but we need to be smart in terms of how we do it, whenever we've done full cycle docking, but the first of the big maintenance programs in relation to the Collins class submarine, as we do the life of type extensions on the Collins class submarines. We need to be managing what new equipment we put on to the submarines with making sure that submarines are out the door as it were, in a timely way, so that we have the availability of both submarines. And that management of putting capability on, but also making sure that submarines are available for operation, has always been a tension which needs to be managed by going forward. The pressure on that is really going to be significant, and we will have to be really smart in the way in which we do that, we will be smart, but I'm really confident that we can see an evolving submarine capability from this day through until we eventually run a full fleet of our future submarines. And as long as we see an evolving capability, we don't have a capability gap. And so I am confident we can get there. But I'm not saying sanguine about the challenge in front of us, and it's a challenge that's fundamentally been given to us by the completely inept way in which Peter Dutton and the former Liberal government managed the whole question of submarines during the lost decade that they were in power. 

ENDS