TRANSCRIPT: JOINT PRESS CONFERENCE – ASC SHIPYARD
TRANSCRIPTION: PROOF COPY E & OE
DATE: 12 December 2012
TOPICS: Land-Based Test Centre; Coles Review; Service Life Evaluation Program;
STEPHEN SMITH: Well thanks very much for turning up. I'm very pleased to be at Techport today with Premier of South Australia, Jay Weatherill, with the Federal Minister for Defence Materiel, Jason Clare and also with South Australia's Treasurer and Minister for Defence Industry, Jack Snelling.
And we've got a number of important announcements to make today about the future of ship building in this facility. Important announcements for the future of Navy and Defence and important announcements for the Future Submarine programme.
We've distributed a range of materials and they've been made available to you. I'll make some remarks, throw to the Premier, then I'll ask Jason and Jack to make some remarks and then we're happy to respond to your questions.
Firstly I'm very pleased to announce today that the Government has decided that the Future Submarines land-based test facility will be based substantially here. The bulk of the facility will be here, in or around Techport and that's for the obvious reason that Adelaide is the centre of our submarine industry.
Whilst we still have to work through some of the details of that land-based test system, it is quite clear from the study and the work that we've done that that land-based test system will form an invaluable part of the work in the run-up to the building of our 12 new Future Submarines.
Other aspects of the facility will be based in Western Australia where we do submarine training and also in Fisherman's Bend in Victoria in Melbourne where defence scientists - maritime experts - operate. But the facility and the cost of that facility and the investment of that facility, will run into the millions and hundreds of millions will substantially be based here.
That's very good news for Techport. Very good news for Adelaide. Very good news for South Australia. It underlines the compelling case for our Future Submarines to be assembled in South Australia at this facility.
Secondly today I'm releasing the final report of the Coles Review into maintenance and sustainment of the Collins Class submarine fleet. This is the most comprehensive review and analysis that has been done into the longstanding difficult sustainment and maintenance issues of the Collins Class submarine.
And this will be an invaluable document as we move to make the Collins Class submarine available on a greater basis and also an invaluable study as we do the work for the future submarine programme.
John Coles, a UK expert, has spent the last 12 to 18 months working on this report and the final report is being released today. It essentially says that the basic flaw with maintenance and sustainment of the Collins Class submarine has existed since the first Collins Class Submarine went into the water in 1996.
This has been a problem which has bedevilled the Collins Class Submarine for over 17 years and been a longstanding, entrenched difficulty for successive governments, for Defence, for Navy and for the Defence Materiel organisation and for ASC itself.
The fundamental recommendations are that we should reduce the deep maintenance programme of the Collins from three years to two and that we should set ourselves the objective of two submarines being available on a fulltime basis, three submarines being available 90 per cent of the time and four submarines being available on 50 per cent of the time.
It's quite clear from Coles' report that we fall substantially below any comparable international benchmark. So those people who assert that this is a recent difficulty, they should read the Coles Review.
The Coles Review is also a substantial assistance in terms of planning for the Future Submarine. The lesson that we've learnt from Coles, the lesson that we've learnt from the difficulties, the longstanding entrenched difficulties of Collins Class maintenance hold us in good stead for our work on the Future Submarines project.
It essentially says that you should not embark upon a Future Submarines project without first ensuring you have a long term maintenance and sustainment programme embedded as part of the programme.
The third major announcement is today we are releasing the analysis or the outcome of the Collins Class Submarine Service Evaluation Study. This has been looking at an analysis of the life of the Collins submarine.
The first Collins Class submarine went into the water in 1996, the last in 2003. When they went into the water they had an on-paper shelf life of 28 years. The study, which has been done on the service life evaluation, the outcome of which Jason Clare and I are releasing today, indicate that there's no reason - no one single reason - why the Collins Class submarine can't meet that life of service.
It also finds that there's no reason why that life of service couldn't be extended for one full operating cycle - some seven years excluding a period of formal deep maintenance.
So those three announcements today - the land-based test system, particularly for propulsion testing to be based here, the Coles Review into improving maintenance and sustainment of the Collins Class Submarine and the Service Life Evaluation, looking at the life of type of the Collins Class Submarines most important contributions to our work on the Future Submarine program.
As we've made clear in the past we continue to examine all options for the Future Submarine other than the nuclear powered option and our timetable for decision making is as we indicated earlier this year.
We indicated in May of this year that we would release the analysis of the submarine industry skills plan, which Jason Clare will refer to in a moment that we would release the outcome of the Service Life Evaluation Study and we've set ourselves a task of making decisions in the course of the next 12 to 15 months on the Future Submarines combat or weapons system with a view to a first pass decision at the end of next year or early 2014.
Jason Clare and I also are making some other announcements about projects of concern, about amphibious capability. Jason will refer to those in his remarks.
Can I ask the Premier to make some remarks and then as I've indicated Jason and Jack will make some brief remarks and then we'll happily respond to your questions. Thanks.
JAY WEATHERILL: Thank you Federal Ministers, Stephen and Jason, Treasurer, ladies and gentlemen - in particular the ASC workforce who are represented here today; a number of them young apprentices who are starting out on their career in the workforce and that's essentially the importance of today.
Today is about consolidating a future for workers like the ones we see here so that they will have fulfilling, well paid, high-skilled work into the future which will underpin the economic base of South Australia.
We of course welcome this announcement. It's something that we've lobbying for, making representations about over a considerable period and this is a fantastic day for South Australia. It builds an irresistible case for South Australia to be the home for the Future Submarines project.
That project with 12 new submarines, which is more of an industry than a project because it will continue both through the construction phase and the sustainment phase over a very extended period.
This is not just a great announcement for jobs now and jobs in the future, it also builds on the capability and skills that we want to have here in South Australia. We have an ambition for South Australia to be an advanced manufacturing state and what we see here, at this facility, is the manifestation of an advanced manufacturing enterprise.
So the skills and capabilities that exist here, as vital as they are for Defence, also have incredibly important cross-over effects in our mining services sector, in various other sectors of the advanced manufacturing world which allows us to take those skills and capabilities and grow the enterprises of the future.
So this is a great day for South Australia. We welcome the announcement of the land-based test site being based here. It's wonderful that we looked carefully at the experience of the Collins Class Submarines and are learning the lessons that exist.
And those lessons are - you start planning at the front end, you do your testing and design work at the front end, you design your sustainment and maintenance arrangements at the front end, and that gives you benefits throughout the whole of the life of the project.
So that's something that we have here. It's great that investment is being made here in South Australia, here in Techport and that will stand us in good stead for the future submarines project.
Can I also acknowledge that it's very pleasing to see that there is a long term commitment to the Collins Class Submarines. This is the heart and soul of the ASC which began of course this project many years ago now, so it's wonderful to see that there is a rapport which secures the long term future for Collins Class Submarines, their maintenance based here in Techport, which will provide jobs, skills and capabilities for the future.
So thank you to everybody who has been part of bringing us to this day, in particular to the two Federal Ministers, Jason Clare, Stephen Smith, thank you very much for putting your faith in South Australia and I'm sure it will be repaid.
JASON CLARE: Thanks, Stephen, thanks Premier. Look, the Premier is absolutely right, with a project the size of the Future Submarine project we're not just talking about a project to build 12 submarines. You're talking about a new industry for Australia.
To build 12 submarines takes more than two decades and by the time the twelfth submarine is built we'll need to replace the first. The means we're building an industry potentially for a century or more and much of that will be based here in Adelaide.
As we've said on a number of occasions the Future Submarines will be assembled here, this is the home of the Future Submarine project and we'll make four important decisions about the Future Submarine project over the course of the next 12 months.
One is the combat system that will be installed in the new submarine.
The second is a narrowing of the options that we'll consider for the new submarine.
The third is how do we tackle the valley of death that exists between the end of the construction of the AWDs, the Destroyers, and the start of construction on the first submarine.
And the fourth is the land-based test site that we announced today will be based here in Adelaide.
And this is a multi-million dollar project, potentially hundreds of millions of dollars and that will be based here in Adelaide. In simple terms this is a facility where we'll test and prove the engine for the submarine before we install it into the submarine and it's a very important way to reduce the risk on the project, the risk of cost overruns and delay by doing the testing on land before you put it into the submarine. It's the sort of thing that we should have done 20 years ago when we built the Collins submarine.
On that point the report that we're releasing today from John Coles is very, very important. It provides us with a blueprint to transform the way we maintain our current submarines. The report makes it clear that these submarines were well built and they're well crewed by the Navy but we need to fundamentally change the way that we maintain our submarines.
And, that means having one submarine here in deep maintenance at any one time instead of two and having deep maintenance go for a period of two years rather than three. It involves big changes to the way in which we maintain submarines, not just tinkering at the edges, not just evolving the way we do this but fundamentally transforming the way we maintain our submarines.
And, as the report says these are the things that we should have done back in 1996, they're the things we're committed to doing right now in implementing this report.
One more thing, we're announcing today that Australia's biggest defence conference is coming back to Adelaide. The D&I conference was last year in 2011. The next D&I conference will be in 2014 and it will be back here in Adelaide. In truth it's never left but there have been a lot of people around the country lobbying to have that conference somewhere else.
We've had some terrific lobbying from the Premier and from the Treasurer that the conference should stay here in Adelaide and they've got the strongest argument for it, this is the defence State. We spend close to $2 billion every year here on defence in South Australia and this will mean thousands of people coming to Adelaide for the conference and inject millions of dollars into the local economy.
One more thing before I hand over to Jack, not everyone would know that it's Stephen's birthday today, so happy birthday, Minister.
Jack, over to you.
JACK SNELLING: Thank you very much. Look, this is undoubtedly the best news for jobs in South Australia since the decision to establish holdings here in the 1940s. I'd like to thank both Ministers and the Commonwealth for putting their trust in South Australia for establishing an industry.
Not just a one-off project but an industry that will provide jobs to thousands of South Australians for many, many decades to come. The State stands ready to partner with the Commonwealth in the establishment of this test facility which is going to be the first part of the creation of an industry that will dwarf not only anything that's ever been undertaken in South Australia before but anything that's been undertaken in the nation before.
This is fantastic news for jobs for our kids and will see South Australia have a strong manufacturing base for very - for many, many decades to come. Thank you.
STEPHEN SMITH: Thanks Jack, we're happy to respond to your questions.
JOURNALIST: [Indistinct] to extend the life span of the Collins and also the life [indistinct] with submarines, is that likely to push out the construction time [indistinct]
STEPHEN SMITH: We've indicated that in terms of the Future Submarine program we'd like to make a decision in about 2016, 2017 a so-called second pass decision so that subsequent to that construction can commence.
What the three announcements today effectively do is we know that the bulk of the testing will be done here and as both the Premier and the Treasurer have said, that's very good news for South Australia. It's also an obviously decision to make.
The expertise is here, and as Jason made the point it's something that we should have done back in the 1980s and 1990s when the Collins itself was being constructed.
Secondly the Coles Review says that the performance of the Collins Class Submarine can be substantially improved. Once the Collins is in the water it's a very good and very effective submarine. What we need to do is to get it in the water on a more regular basis. And the aspiration in the Coles Review, which we have adopted, is to have two submarines available for 100 per cent of the time, three submarines available for 90 per cent of the time and four submarines available for 50 per cent of the time.
Adding that to the Service Life Evaluation Program tells you that the Collins Class, which on paper was good to 2024 through to 2031 is potentially on paper good through to 2031 to 2038.
Now I say on paper because by that time you'll be dealing with an ageing platform or an ageing submarine but we see nothing in the various reports that we've released today which would cause us to do anything other than to stick to our absolutely commitment to have 12 Future Submarines assembled in South Australia; to do that in a way in which we utilise all of the experience from Collins, do all of the necessary work beforehand and then start the build of a future submarine program and doing that in the manner where we don't have a gap in capability.
The importance of the Service Life Evaluation Program analysis is that it gives us confidence that we can do the work on the Future Submarines program and not have a gap in capability which has occurred previously for example in the transition from the Oberon Submarine to the Collins itself.
There's nothing in the reports today that would cause us to put off the build of the Future Submarine program. On the contrary, there is a lot of information in the Coles Review which will be of assistance to our decisions in the future submarine project.
JOURNALIST: When would you expect that to commence?
STEPHEN SMITH: Well as I say we gave an indicative timetable earlier this year that we would indicate where the land-based test system would be in the course of this year, which we've done, that we would receive the industry skills plan, which Jason has referred to. We've done that.
We expect in the course of next year to make decisions about the combat or the weapons system. We expect by the end of next year or the first quarter of 2014 to make what is referred to as a first pass decision with a view to making a second pass, in other words a final decision about options in 2017, around that timetable.
We're not proposing to be more definitive than that because we want to make sure that we don't make the same mistakes that were made with Collins. In other words we do the exhaustive studies now.
When I first became Defence Minister just over two years ago, I was urged by a number of people both within Defence, and outside of Defence to really embark upon the Future Submarines program and I said that I could not, in any responsible way, take [indistinct] of the Future Submarine program without first getting a very serious handle and analysis on the difficulties that we had experienced since 1996, on the Collins Class Submarine.
We could not embark upon the biggest capital works program the country has ever seen without doing the exhaustive independent external analysis on Collins. We've done that. The truth is we've done more work in terms of analysis of the Collins Class Submarine over the last two years than we did in the previous 14 or 15.
JOURNALIST: How do you expect ASC to be able to meet the required [indistinct] - will they require more funding or do you believe they can [indistinct]-
STEPHEN SMITH: ASC are absolutely committed to meeting the benchmarks set by the Coles Review and when you look at Coles' final report you'll see that he endorses a number of recommendations that he made some 12 months ago. The most important of which was the signing of an In-Service Support Contract between Defence and ASC which changes the maintenance contract from a cost-plus contract to a performance and productivity-based contract and that has now been on hand or underway since 1 July this year.
So ASC have responded very well. They fully cooperated with Coles and his team and they've already made a range of changes which has seen, as the Coles Review indicates, a steady increase in performance of the Collins themselves. Today for example, whilst we've got three Collins here, we've got two Collins Class Submarines available for operations and that is the benchmark set - the first benchmark set by the Coles review itself.
STEPHEN SMITH: You don't need to shout or rush, we're here for plenty of time.
STEPHEN SMITH: Well the first thing that we need to do which ASC is committed to and they've already started this process with the signing up of the In-Service Support Contract from 1 July this year which is productivity and performance-based not cost-plus base is to improve productivity and improve performance. ASC is absolutely committed to that.
STEPHEN SMITH: In my view yes.
JOURNALIST: Given that these problems existed with the Collins for 14 or 15 year-
STEPHEN SMITH: Seventeen.
JOURNALIST: Seventeen years. What makes you [indistinct]- in the next 16 or 17 years so you don't wind up with that problem?
STEPHEN SMITH: Well Coles says that if you follow his recommendations which we've agreed to and you methodically implement those recommendations you will get to a respectable international benchmark with two submarines available 100 per cent time, three available 90 per cent of the time and four available 50 per cent of the time you can do that over the next three year period.
And if you add that to the Service Life Evaluation Project report which I've referred to, you take an on-paper life of the Collins from 2024 to 2031, to 2031 to 2038.
Now I stress that is an on-paper. By that time you'll be dealing with an ageing submarine. But Coles makes it clear in his report that the potential is there in the second half of the life of the Collins to actually get a better performance in the second half because of a more sustained and deeply thought through maintenance program than we've got in the first half.
We had seen because of the difficulties of 17 years the performance of the Collins in terms of availability and operations in the water reduce over that period. What we now need to do is to get that on to a plateau and then to steadily increase it.
And Coles himself says that as a result of the work that's been undertaken since he commenced his study we've seen a stabilisation of the performance and a slight trend line increase and we want to see that continue over the next three years.
I had one here and then we'll come over here.
JOURNALIST: So if you can extend the life of the Collins Class Fleet [indistinct]- how late can you leave it for construction to start on the new submarines?
STEPHEN SMITH: As I said earlier, there's nothing in the reports today which give us an incentive or cause us to want to delay the steady, detailed planning and progress we've been making on the future submarine program.
I stress that the so-called life of the Collins is an on-paper life. It is a judgement made about how long a platform will last. We know from the experience of other navies and other submarine fleets that it's possible to extend the life in real terms.
The US Ohio Class for example has its life extended from 30 years on paper to 40 years. The on-paper life of the Collins when it went into the water was 28 years, so there is that potential. But we're not allowing that study to cause us to deviate in any way from the methodical plan we have put forward for what will be the country's biggest capital works program.
JOURNALIST: What's you reaction to the article in The Financial Review today that says basically it doesn't make financial sense to spend $36 billion designing and building Australian fleets of submarines when you can buy them overseas off-the-shelf [indistinct]-
STEPHEN SMITH: Well firstly the cost of $36 billion is not a cost that Defence has ever ascribed to. It's a cost that's been put out there by think tanks and other organisations. That's the first point.
Secondly we continue to exhaustively assess all of the options and all of the options are an off-the-shelf submarine, an off-the-shelf submarine modified, a derivative of the Collins - what I describe as a son or daughter of Collins - or a brand new design. And we're doing the exhaustive studies for all of those options.
The only option we have ruled out is a nuclear powered option and my rationale for so doing is that Australia doesn't have a nuclear industry. We don't have the capacity, in my view, to run a nuclear submarine fleet. If we were to do that we would essentially outsource the fleet to another country.
So we have exhaustively examining all of those options. There is nothing in the Coles report which would cause us to say that any one of those options should at this stage be ruled out. It's very important from a national security point of view that Australia as a maritime country and a maritime continent with very important sea lines of communication and trade has a submarine fleet.
And we committed ourselves in 2009 to a submarine fleet of 12 to be assembled in Adelaide. That remains our absolute commitment. It's not a commitment which is matched by our political opponents but we've committed ourselves to that for national security reasons and we believe they should be assembled - which ever option we choose - should be assembled here because this is the heart and the home of our submarine expertise.
STEPHEN SMITH: Well obviously given that it essentially will be a Defence or a Commonwealth facility there will be a substantial contribution of Commonwealth funds.
The State of South Australia has already indicated that it is prepared to make a contribution to that and has set aside land close to this facility for that purpose if we take it up.
As Jason and I have made clear, we've made the in-principle or substantial decision that the bulk of the facility will be here, in particular the propulsion testing. There'll be other aspects as I've referred to in Western Australia, at HMAS Stirling for training purposes and in Melbourne for Defence science maritime expert purposes but the bulk of it will be done here
We're working through the final details of what the options are. But as Jason has said, we're talking here about a facility which will certainly be in the millions of dollars and almost certainly in the hundreds of millions of dollars but we will make a substantial contribution to that.
The Government of South Australia is keen to also make a contribution and ASC itself is also keen to play a leading role in that but we'll get to work through and announce those details in the course of next year. Sorry, I've got one here, sorry.
STEPHEN SMITH: We will make a substantial contribution to the facility. In the current budget and forward estimate years there is more than sufficient funds allocated for the work that we are doing at the moment. In future budgets there will be more than sufficient funds for the land-based propulsion site and other work required to be done on the Collins.
STEPHEN SMITH: Well what you - when you make your choice and this is why we're doing the exhaustive analysis, when you make your choice you need to bear in mind the strategic implications and the strategic design of the submarine.
Most of the off-the-shelf submarines are European submarines not designed to cover the distance of Australia's maritime area. We are a very large land mass. Most of the off-the-shelf submarines that people draw attention to are European submarines and they spend their life in the Baltic Sea or in the North Atlantic Ocean.
So we have to have a submarine which is capable of patrolling Australasia but also capable of patrolling Australia's northern and western approaches and that's why we built the Collins because you need a larger submarine than those which are available on the shelf.
But we have not discounted the potential that we could find an off-the-shelf submarine which we could modify, that's why we're doing the exhaustive studies. But whilst some people are certain that we can go and buy off-the-shelf a cheaper submarine, you have to make your starting point what are the strategic and national security implications? There's no point Australia having a submarine which is not capable of patrolling our maritime space or patrolling our northern and western approaches.
STEPHEN SMITH: In terms of this facility here and the work force here and the work flow here, we're here in September for the [indistinct] for the AWD, the first AWD. We saw the progress that's being made and it's very good progress, we very pleased with the progress so we're on track in terms of the air warfare destroyers for the first one to be produced out of here in March of 2016, the second of September of 2017 and the third in March of 2019.
And so what we need to do is to make sure that we've got a smooth flow of work after March 2019 and that's why we're looking at a range of options. I've been asked recently about the potential for a fourth Air Warfare Destroy and I've made the point that in the 2009 White Paper that was listed as an option. The Government will give consideration to that and will do that in the course of the next 12 months or so.
So what we want to do is to make sure we've got a smooth flow of work. That may well be with other shipbuilding arrangements or it may be that the timetable for the Future Submarines Project and the land-based facility itself provide that flow of work.
But, we're not proposing to be rushed into that because we want to do the exhaustive analysis of all the options that we have. The worst thing that we could do, and all of the studies bear this out including Coles, in a big complex project like this the mistakes you make at the start of the project magnify and so we are doing everything we can to minimise the risk at the outset and that - that is why it would have been wrong two years ago to take up the urgings of some people and rush into decisions about the Future Submarine Project.
STEPHEN SMITH: I was at Williamstown last week or the week before to inspect, together with Jason, the first landing helicopter dock. I was asked the same question there and I made the same point there which is valid today, the Air Warfare Destroyer Alliance is currently giving consideration to whether BAE in Williamstown should get more blocks into the future.
In the end that's a commercial decision for the Air Warfare Destroyer Alliance but one important, relevant factor is that everyone acknowledges that since the earlier difficulties BAE has made substantial progress and is now producing very good quality work so far as the air warfare destroyer project is concerned.
So that's a matter which the Alliance currently has before it. In the end they'll make a commercial decision.
STEPHEN SMITH: Well the work of the air warfare destroyer, the substantial work of the land-based test system, the land-based propulsion test system, any other work that the Government decides might come here plus the early work on the Future Submarines program, our ambition is to make sure that is a smooth flow of work.
We want to work our way carefully through all of the decisions associated with the Future Submarine program. It is possible. There is potential that the land-based facility here will see sufficient work after March of 2019 when the work on the third air warfare destroyer completes but we are not assuming that, nor are we not giving consideration to other issues including, as I said earlier and at Williamstown a couple of weeks ago, whether we move to a fourth air warfare destroyer which was a commitment we gave to consider in the 2009 white paper.
STEPHEN SMITH: I've seen that suggested today by some commentators. Not in my mind. The analysis of Coles, so far as the Collins is concerned, is that the fundamental mistake made on the Collins Class Submarine was not having a well thought through, substantial, maintenance and sustainment program from the moment the submarine was conceived and certainly from the moment the submarine went into the water in 1996 and, we're not going to make that mistake again.
Coles himself says that if you follow the road map that he has outlined, you've got potential to have a better performance from the Collins in the second half of their life than in the first half of their life. I also see from time to time our political opponents making criticisms of us.
I simply make this point, it's a point made by an overseas expert, the first Collins Class Submarine went into the water in 1996 and the last one went into the water in 2003 and we came to office in 2007 in December. So there's a 17 year history; 11 to 12 years with one Government and five to six with another. This is a long standing issue which has bedevilled governments of both political persuasions over a long period of time. But in my view over the last two years we've done more work to address those problems and to get a better performance out of the Collins than has been done previously.
JOURNALIST: Is it fair to say the way in which DMO and ASC responded to the Coles Review will play a part in determining which of the four options?
STEPHEN SMITH: Well, it is absolutely essentially the case that ASC, DMO, Navy and Defence, all respond in a positive way to the Coles report and I'm confident that they will indeed. Cole