Minister for Defence – Joint Press Conference with UK Secretary of State for Defence, Philip Hammond – BAE Shipyard, Henderson




TOPICS: Perth Scorchers; AUKMIN; Fleet Base West; procurement cooperation; Mali; Afghanistan transition; hostage situation in Algeria


STEPHEN SMITH:      Well, thanks very much for turning up. I’m very pleased to welcome United Kingdom Defence Secretary Philip Hammond to Perth and to Australia. This is Philip’s first visit to Australia as Defence Secretary, and I’m very pleased that he’s been able to come and spend the day with me in Perth before our formal AUKMIN meeting tomorrow with our foreign ministerial colleagues, Foreign Secretary Hague, and Foreign Minister Carr.

Because of the wind- rather than the intense heat- I’ve given Philip an education about the Fremantle Doctor, so he understands our blustery conditions and he’s also had a complete exposition and analysis of the Scorchers’ victory last night. So following in the finest traditions of the Australia United Kingdom relationship. But on a serious note, AUKMIN is being held in Perth because Perth, of course, is our Indian Ocean capital. We’ve just come from HMAS Stirling, or Fleet Base West, where we’ve inspected our frigate, HMAS Perth, and subsequently to ASC where we’ve inspected our submarine HMAS Farncomb. We are now here at BAE, and you see the upgrade to the frigate Arunta behind us, and from here will go to Austal.

That gives Philip a very good brief on the things that we’re doing in Western Australia- the importance of our maritime effort in Western Australia, not just in Navy terms, but in general terms. The rise of India and the importance of the Indian Ocean will be one of the topics of conversation at AUKMIN tomorrow, as will all of the strategic matters of interest to the United Kingdom and Australia. Whether that’s the movement of strategic and economic importance to our part of the world, the rise of China, the rise of India, the rise of the ASEAN economies combined, the emergence of Indonesia. Whether it’s the international security concerns and threats that we now see, Mali, Syria, the DPRK and its nuclear program, and Iran.

We’ll also have a serious conversation about the challenges that Defence, whether it’s Defence in the United Kingdom, Defence in Australia, or in other countries like the United States and Canada and New Zealand, currently face. The difficulties of fiscal restraint, the challenges of procurement and maintenance and sustainment at a time of fiscal restraint and the effort to try and do more things together. So, one of the things Philip and I have had a conversation about today, and we’ll have further conversation about it formally tomorrow, is the extent to which what is already a very good practical cooperation between Australia and the United Kingdom can be enhanced.

This is our fifth AUKMIN. We had AUKMIN in 2011 in Sydney, we had AUKMIN last year in London and very pleased that this year’s AUKMIN will be in Perth. So I’m very pleased to welcome Philip. Philip has just come from Indonesia, so I’ll ask Philip to make some opening remarks and then we’re happy to respond to your questions.

PHILIP HAMMOND:  Thank you, Stephen. Well, thank you again for coming this morning. It’s a great pleasure to be here and to have this introduction to your Indian Ocean naval facilities. Our relationship with Australia is a deep and enduring one, and you are in an area of the world that is becoming increasingly important for all of us. The cooperation that Stephen has spoken about is military and strategic. It’s also around procurement, making sure that in a time when we all face constrained budgets, we get absolutely the maximum that we can out of them and where we can do that by working together. It makes sense for us to do so, so I’m greatly looking forward to the discussion that we will have over the next 48 hours both on the big strategic issues, and on the practical issues of defence transformation and defence cooperation. We look forward to many, many years of close collaboration together in the interest of both countries. Thank you very much.

JOURNALIST: Is Australia or Britain going to contribute troops to Mali?

STEPHEN SMITH: Well, I’ll go first and then ask Philip to respond. Both Bob Carr, the Foreign Minister, and I have made it clear in the last 24 – 48 hours we strongly support – Australia strongly supports the French intervention. We also- and we’ve made this clear at the Security Council level- strongly support the bringing forward of the African Union contribution to the extent that that is practically possible. We’ve also made it clear that should there be a need for humanitarian assistance or disaster relief, as ever, Australia stands ready and willing to contemplate that. We are not considering any military engagement ourselves. It’s not operationally our part of the world but as a member of the Security Council we will be down the track looking to see whether Australia needs to make, or it’s appropriate to make, some form of contribution to the African Union contingency, which is scheduled to go in as a result of Security Council resolution. But, Philip you can-

PHILIP HAMMOND:  Yeah, well, again we strongly support the French intervention in Mali. France is the country with the closest links in the area, and the best understanding of the area, but the solution in the long term must be an African solution- African support to rebuild and train the Malian army so that the Malian army can defend its own territory. The UK is already providing logistic support to France. We have two C-17s tasked at the moment carrying French troops and equipment both between France and Mali, and from other West African French bases into Mali, to support the French operation. But again, we have no plans to commit any combat troops to that operation.

JOURNALIST: Can I ask, in relation to Afghanistan, you’ve both flagged the possibility that special forces may remain there after the bulk of your respective troops have left. If so, and if the mandate was appropriate, would you – could you envisage Australian and British special forces working together in Afghanistan post-2014?

PHILIP HAMMOND:  Well if I go first, we have only made one commitment post-2014 so far, and that is to the Afghan National Army Officers Academy where the UK and Australia will work together providing an ongoing training capability. We’re open to other ideas about what we might do post 2014. We don’t believe we have to make those decisions yet, so we will wait to see what decisions other allies make, what the Afghans are looking for, what they are willing to accept. We have to recognise that this is sovereign territory we’re talking about, but as a matter of policy we never comment on the deployment of our special forces, anyway.

STEPHEN SMITH:      Well, so far as Australia’s position is clear, I made some remarks earlier in this week where we made it clear that our advice, our assessment, is that we’ll see transition in Uruzgan by the end of this year. Previously we’ve been talking in terms of the end of 2013 or the first quarter of 2014, but we are confidently on track for transition in Uruzgan itself by the end of this year. We are, of course, committed to transition in Afghanistan by the end of 2014, which is the Chicago Summit and the Lisbon Summit international community agreement and arrangement. We’ve made it clear that post-2014, post December 2014, we are prepared to make some ongoing contribution. We’ve made it clear, as Philip has also made it clear, that in the training area, we will make a contribution to the United Kingdom officer training arrangements, and we’ve made that clear and we will obviously stick by that.

We’ve also made it clear that under an appropriate mandate, in appropriate circumstances, then we would contemplate a special forces contribution, either for training of Afghan special forces or, indeed, for counter-terrorism purposes if that was properly authorised and appropriate. But, as Philip says, whilst international community, including the United Kingdom, Australia, need to be thinking seriously about these issues as we go through the transition phase. We haven’t yet come to any conclusions- very important to what ongoing contribution Australia makes other than training, will be what mandate is given by the Afghan Government. And one of the things we saw recently with President Karzai’s visit to Washington, was the start of a discussion between Afghanistan and the United States for what Australia would call a Status of Forces Agreement, what the United States and Afghanistan would refer to as a security partnership arrangement. So, we’ve made it clear that we have those matters on the table, but we will come to conclusions about these matters in the course of next year and 2014.

JOURNALIST: Minister, have you been given an update on the situation in Algeria, and do you know whether any Australians are caught up in it?

STEPHEN SMITH:      Well in the first instance, that’s obviously a matter for Foreign Minister Carr and, no doubt, he’s made public comments on the eastern seaboard and he’ll be available to comment on that tomorrow. But the advice I have is that we’re currently proceeding on the basis that no Australians have been caught up in this matter, but we can’t confirm that. DFAT is going through all of its usual processes to seek to confirm that one way or the other. But the current advice is that we’ve got nothing which would indicate publicly that Australians have been caught up in it, but DFAT is working overtime to confirm that one way or the other. Philip might want to make some remarks about that as well.

PHILIP HAMMOND:  Well, I just say from the UK point of view that UK citizens are involved in this incident. We don’t have full details at the moment, but we’re obviously working very hard at the moment to clarify the position on the ground and to see the way forward, and I’m sure the Foreign Secretary will have something further to say about this when he gets in tonight.

JOURNALIST: Can you both give us any practical examples of areas where closer cooperation defence procurement could actually occur? Would you talk specifically on the surface ships, submarines, can you just elaborate?

STEPHEN SMITH:      Sure. Well, if I just rewind a bit. When we had AUKMIN in 2011, which was in Sydney, the then Secretary and I, Defence Secretary Fox and I went to Adelaide. And there we saw a range of practical and cooperative measures, longstanding practical cooperation between relevant Australian agencies and UK agencies. And DSTO, our Defence Science and Technical Organisation was a classic illustration. But we’ve already seen today, in the course of our visit to HMAS Stirling and to ASC, two areas where there is potential for future cooperation. HMAS Perth, one of our frigates, our first frigate to see its upgrade, down the track currently scheduled for the end of the 2020s, we will need to look at a future frigate program. The United Kingdom is going through comparable deliberations with its proposal for a type 26. Our current frigate is very comparable to United Kingdom Duke frigate, Type 23 I think it is. And so one of the things that Philip and I have had a preliminary conversation about, the extent to which into the future there could be collaboration on future frigate programs.

At ASC, we inspected HMAS Farncomb, one of our six Collins class submarines, which is undergoing some maintenance. It’s already been the case that there has been very good collaboration between Australia and the United Kingdom on submarines. One of the things that I did in the margins of AUKMIN last year was to speak to a range of submarine experts, which was very helpful in trying to improve our sustainment and maintenance arrangements on the Collins class submarine, and John Coles, whose review I released in the middle of December last year, of course, is a UK expert. So, submarine maintenance and sustainment, future submarine programs, discussion about some of those maintenance, design, build issues are, we think, potentially open to us. But we’ve had a very preliminary conversation about that.

But the more general point that Philip and I make, and we’ve made this both in our own conversations over the last twelve months or so, but also publicly is, at a time when every comparable nation is seeing fiscal restraint and fiscal difficulty, working together in close collaboration generally on procurement, on capability, on acquisition is a very sensible thing to do. Adding critical mass often makes things much more effective and much more efficient. And over the years you’ve seen Australia engage in that sort of conversation with the United Kingdom, with the United States, with New Zealand. We think there is a lot of potential, whether it’s frigates, for example, the future frigates, we think there is a lot of potential to formalise that conversation between Australia and the United Kingdom, much more assiduously into the future to see whether we can make these opportunities, or whether these opportunities exist.

Philip, do you want to add?

PHILIP HAMMOND:  Well, I’ll just add two things to that. First of all the program that Stephen spoke about, the type 26 global combat ship, which will be our future frigate. We have designed it from the outset with the idea that we would build this frigate both in the UK for our use and through partnerships with other countries for their use. It’s designed as a platform that can be fitted with different combat systems for different types of operations around the world. So we believe this really would be something that is worth exploring as a win-win collaboration between the UK and Australia, who would be the first nation to join with us in this program.

But I think more broadly, as Stephen said, under fiscal pressure we need to get the maximum we can out of our defence budgets, and I think we both have two red lines, as it were. We need to keep technical capabilities and jobs in our own countries, and we need to ensure interoperability of our equipment, both between ourselves and with the United States and other key allies. And so we need to look at all these programs in terms of can be satisfy our needs for interoperability, can we maintain the technological base, the industry base and the jobs base that we all see as essential? But if we can share designs, common procurement of parts that have to be bought in, for example, common experiences in sustainment, then we can make our defence dollars go further.

JOURNALIST: So it seems like a very much British-lead relationship, as you’ve been talking about procurement. What does Australia bring to this relationship that Britain perceives?

PHILIP HAMMOND:  Well, on the frigates program our requirements for frigates, I think, yours would be around-do you have a number?

STEPHEN SMITH:      Frigates?


STEPHEN SMITH:      Half a dozen, six.

PHILIP HAMMOND:  Half a dozen. We have a requirement for about 13, so clearly if you’re planning to build a program of 19 frigates you have a lot more potential economies of scale in that, and we will both benefit from those economies of scale.

STEPHEN SMITH:      Over the years, for example, we’ve seen as we’ve gone into a particular surface vessel, New Zealand has placed a comparable order because it raises critical mass. This is being lead not by Australia, not by the United Kingdom, it’s being lead by a partnership. So you’ve got two countries with a long-standing shared history, but you’ve also got two countries who very often see the world in comparable terms, have the same values and virtues. We live in different parts of the world, but there are still things that we can do together in a practical cooperation sense, and as our part of the world is on the rise, then it makes sense for us to have that collaboration, both in a strategic sense but also in a practical cooperation sense, just as we’ve seen in very many respects, our practical cooperation with the United Kingdom and NATO and the countries of Europe has enhanced over the last decade or so, largely because of our involvement in Afghanistan.

But we’ve recently signed up with NATO, for example, a long-term strategic partnership because we see it makes common sense to continue to have the strategic conversations, but also there are constituent NATO countries with whom we can have serious and sensible practical cooperation to mutual benefit, and the United Kingdom is a classic illustration of that.

JOURNALIST: Are these fiscal constraints likely to accelerate an agreement on something like sharing embassies offshore?

STEPHEN SMITH:      Well, I’ll leave that to the Foreign Minister and the Foreign Secretary. Mr Hague has been making some remarks about that. I’ll leave that to Bob Carr, he’ll certainly no doubt respond to that or comment on that tomorrow.

Okay, we happy?

JOURNALIST: Just one final question.


JOURNALIST: The Opposition in this country’s talking about defence cuts. Would that concern the UK in the context of trying to form a long-term relationship built around very long-term and expensive projects?

PHILIP HAMMOND:  Well, we understand that many countries around the world, including the United States, the world’s biggest defence spender, are under pressure to rationalise their defence budgets. The key lesson that we’ve learned as we’ve gone through this process is it’s about getting value for money for the budget we do have available, and of course the – when you drill down into these things, you find that by collaborating together, by bulking up programs, by designing things so that they can meet the needs of more than one country, you can actually get a lot more out of the budget that you have available, and I think that’s the key that we will be focusing on. Making sure that for every dollar or pound of taxpayers’ money we take, we get the absolute maximum military output that we can from it.

JOURNALIST: How can you get value for money if manufacturing within your own country is expensive? It is expensive in Australia, it’s expensive in Britain.

PHILIP HAMMOND:  The- we’re talking about, you know, if you’re talking about a ship, for example, I’m often asked the question, why don’t we just build warships in South Korea or somewhere which builds ships much more cheaply than any of us can? But a complex warship is not like a commercial vessel.  A complex – most of the value in a complex warship is in the high-end systems, the war fighting systems. The hull itself is a relatively small part of the total cost of the ship, and maintaining – certainly, and speaking for the UK, maintaining a sovereign capability to build complex warships is very important, and it will also be very important for Australia. So when we look at these collaborative programs, they have to try to extract the economic benefits of collaboration, but they also have to respect the sovereign capability requirements of all the partners.

STEPHEN SMITH:      The way I articulate that is that of course as Defence Minister you run a defence policy and a national security policy. You don’t run an industry policy. But there are important areas of your national security and strategic and defence make up where it is essential to have a local industry capability. And historically in Australia that has included our maritime capability, both surface vessels and submarines.

So when you make the judgements about whether you build onshore or purchase offshore, one of the things you always have to bear in mind is the extent to which having a local capability, a local capacity, is actually part of your strategic makeup and necessary strategic makeup.

So it’s not just a question of where is the cheapest place in which you can build or buy something. But, as with every other country, Australia’s acquisitions are a mix of onshore build and purchased off the shelf from offshore. Okay, thanks very much, everyone.

Thank you.

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