TRANSCRIPT: MINISTER FOR DEFENCE AND MINISTER FOR DEFENCE MATERIEL – JOINT PRESS CONFERENCE – THALES, BENDIGO
TRANSCRIPTION: PROOF COPY E & OE
DATE: 20 JULY 2011
TOPICS: Bushmaster, Collins Class Submarines, Veterans, Carbon Price.
STEPHEN SMITH: Thanks very much for turning up. I'm here with Jason Clare, the Minister for Defence Materiel, and with Steve Gibbons, the local Federal Member for Bendigo. And it's a great day of celebration, seeing the eight-hundredth Bushmaster come off the production line.
It's a great credit to Bendigo, it's a great credit to Thales, its management and its workforce.
The Bushmaster saves Australian lives. As I said in my remarks to the workforce, I've been to Afghanistan on a number of occasions, I've spoken to our diggers who have used the Bushmaster, been inside the Bushmaster both before and after the Bushmaster has been taken out by a roadside bomb, by an IED.
And whilst we've had a range of our soldiers wounded and injured in explosions which have impacted on Bushmasters, we haven't lost one Australian soldier. So it's a great credit to the company.
I was very pleased, as Minister for Defence, together with Jason Clare, the Minister for Defence Materiel, recently to order a further 101 Bushmasters from Thales. When that order is complete and that order comes in at about $130 million, we'll see 838 Bushmasters produced for the Australian Defence Force by Thales in Bendigo.
In addition to that, of course, we have a number of Bushmasters that have been exported primarily to the Dutch and to the British also for use in Afghanistan.
But we've seen the Bushmaster not just in Afghanistan, also in East Timor, but also in our own backyard as well; used for security purposes in the Commonwealth Games in Melbourne but also used in the Lockyer Valley in the aftermath of the floods and the cyclones at the beginning of this year.
So it's a great credit to Bendigo, a great credit to the company, a great credit to the workforce. And I'm very proud as Minister for Defence to be here, to join the celebrations on what is a great day for the Australian Defence industry and a great day for Bendigo.
Jason and I are happy to respond to your questions.
JOURNALIST: Minister, what about the next big order that Thales is waiting on? Where are we up to? Can we expect a decision soon?
STEPHEN SMITH: You can expect a decision soon, in the near future. You of course are referring to the need for Army to replenish its trucks, its protected trucks; also it's light mobile vehicles.
Thales is in the running for that. That of course is the subject of consideration by Defence. And in the not too distant future that will fall for consideration by Jason and I, and my Cabinet colleagues. So I'm not proposing, obviously, to get into a discussion about the merits of that. It's a competitive tendering process but we're expecting to make a decision about that in the not too distant future.
Just as a general proposition, it is course the case that the success of the Bushmaster, the great success of the Bushmaster holds Thales in very good store so far as other projects are concerned. As Chris Jenkins himself said, we know we're dealing with a reliable producer. But we'll take that as it comes. We'll deal with that in a proper methodical way and we'll make an announcement in due course.
JOURNALIST: Steve, how much of a chance is there that the contract could go overseas?
STEPHEN SMITH: Well, as I say, I'm not proposing to get into the merits one way or the other. It's a competitive arrangement. Thales is not the only company bidding for that project. We need to go through the very careful and methodical process of weighing up all of the national security and financial considerations. We're in the course of doing that. We'll make a decision and that will be announced in due course.
JOURNALIST: What message do you think that would send to Bendigo workers if the contract [indistinct] go overseas?
STEPHEN SMITH: Well, the point I made when I spoke to the workforce here is that this is one of the examples of proven Australian Defence Force industry contribution and production. And, as I said, the success of the Bushmaster holds Thales and Bendigo in good stead, in good order, for other projects.
But, given that we are in a competitive bidding arrangement where choices have to be made, it's not appropriate for me to go into the merits one way or the other. I can understand that people in Bendigo, the workforce here and generally, want a decision sooner rather than later. In the end people will have a decision and they can judge the government and the government's reasons for its decision at the time. I'm not expecting that will be too far away.
JOURNALIST: Will it be this year or next?
STEPHEN SMITH: It will certainly be this year. It will certainly be this year.
JOURNALIST: Has it gone on too long, the consideration?
STEPHEN SMITH: Well, I've made the point in respect of all of the Defence capability and acquisition projects that I've been responsible for, the most important thing is to get it right at the outset. And it's very important that in all of these matters we carefully, thoroughly, methodically go through all of the options and weigh these matters up very carefully.
Defence is currently doing that process. In the not too distant future it will fall to Jason and me to make a recommendation to our colleagues. And we'll do that in a clear-sighted and sensible and methodical way.
JOURNALIST: Why does it take so long?
STEPHEN SMITH: Because you don't want to make mistakes.
JOURNALIST: You've come out and said you [indistinct] costs in Defence. [indistinct] contracts be some of the first to go?
STEPHEN SMITH: What I've said repeatedly since I became Minister for Defence is that the Defence organisation - Defence - has to get its acquisitions, its capability, its maintenance, sustainment - we have to get that more efficient and make it more effective. And Jason and I have announced in recent times a range of reforms which will see that. We've already seen as a result of the Mortimer and Kinnaird reforms, that we're getting a 20 to 25 per cent improvement on projects so far as schedule and cost is concerned on projects which are caught by those reforms as compared with earlier projects.
So we want the system to run more effectively and more efficiently. We want the taxpayer to get value for money. We want to minimise the risk and reduce the wastage that we've seen in previous years so far as Defence projects are concerned. And that is an unambiguously good thing for the people of Bendigo and for the people who work at this factory.
JOURNALIST: The Opposition on the Collins class subs is saying there's a national security gap when it comes to these submarines, and that you've been asleep on this issue. How would you respond to that?
STEPHEN SMITH: Well, how I respond to the Collins class submarine is in the way that I have since I became Defence Minister. We have six Collins class submarines. Not all of those submarines can be in the water at the same time. That's not unique to an Australian submarine fleet. It's pretty common, invariably common for conventional submarine fleets. And rule of thumb, we require two of our submarines to be ready for operational purposes. The others are in maintenance or being utilised for training purposes. And my most recent advice from Defence, from the Chief of Navy, is that we have two of our Collins class submarines available for operational matters.
But I've made the point repeatedly that the maintenance and the sustainment of our Collins class submarine is a very significant challenge for the government. This is not a challenge which has arisen over the last nine months while I've been Minister. It has been there for a very long period of time.
Last night I made the point to a Defence think tank that we need to improve the available of the Collins class submarine. We need to get our sustainment and maintenance better. And, as a consequence, I've asked the United Kingdom expert, John Coles, to effect a review on how we maintain and sustain the Collins class submarines.
Earlier this week Jason Clare and I released the Rizzo report into our amphibious fleet which drew attention to longstanding problems in the sustainment of our heavy amphibious ship fleet. I am expecting that the Coles review into the Collins class submarine will do the same thing for submarines that the Rizzo report has done for our amphibious fleet.
I've also made the point last night that we are committed to a new submarine fleet, to 12 future submarines but we have to make sure that we proceed very carefully with the planning of that new fleet. And one of the issues that [indistinct] for consideration and planning considerations of course is the maintenance and sustainment of those 12 submarines.
JOURNALIST: Are you angling towards early decommissioning of the Collins class subs? And what are the maintenance and sustainment costs like? I think the Opposition is saying something in the order of $800 million.
STEPHEN SMITH: They are very significant and they are on the public record. We report on the costs and the availability to the parliament on a regular basis. The point that I have made repeatedly is that it's no surprise to the general public, it's no surprise to anyone who takes an interest in submarines or in Defence that we have very significant challenges in the maintenance of our Collins class submarines.
That's no surprise but we have to do better. And I'm expecting and very confident that the Coles review which I'll receive a preliminary report before the end of this year and final report in the first quarter of next year, will enable us to do better in that area.
JOURNALIST: Is the government committed to supporting local Defence manufacture?
STEPHEN SMITH: Well, Defence acquisition, Defence capability, Defence maintenance and sustainment in Australia has always been a combination of local production and development like here, or off the shelf purchases system overseas. It will continue to be a combination. But the point that 800 Bushmasters make is that Australian Defence industry is still very capable and able to produce for the Australian Defence Force and for the government of the day value for money, highly capable pieces of equipment like the Bushmaster.
JOURNALIST: Steve Gibbons talked about the political implications of a contract like this. [indistinct]?
STEPHEN SMITH: Well, Steve Gibbons has been, as everyone knows in Bendigo, a very enthusiastic supporter of Bendigo, a very enthusiastic supporter of Bendigo's economy, and a very enthusiastic supporter of Bendigo's manufacturing industry. And I don't need to do anything other than to just refer to Chris Jenkins' remarks about the way in which Steve Gibbons is a very, very strong supporter.
He of course has been urging Jason and I to make a decision that is favourable for Bendigo. You would expect him to do that.
We will carefully deal with the merits of these proposals that we have before us. We will await Defence advice and then we'll make a judgment and announcement.
JOURNALIST: So does the department favour Australian-made -
STEPHEN SMITH: Well, the department is still going through its processes and its consideration of that particular project.
JOURNALIST: But it has no particular preference for Australian-made over any other?
STEPHEN SMITH: Well, the preference is to get the capability that we need in a way which gives value to money for the taxpayers. And the capability provided to the Australian Defence Force has always been a combination of Australian-produced and off the shelf from overseas.
JOURNALIST: The issue of military pensions and veterans pensions that's come up, is it fair that they're I think lower than age pensions at the moment?
STEPHEN SMITH: Well, that's a matter that falls within the direct portfolio responsibilities of my colleague, Warren Snowdon, the Minister for Defence Science and Personnel. So he has been dealing with that issue for all of the time that he's been Minister.
In this matter the Liberal Party has been very disingenuous, pretending to military superannuants there is a magic solution. Recently a Bill was rejected in the Senate. What the Liberal Party never told anyone is that if that Bill had been passed, it would have seen the taxpayers of Australia fork out billions of dollars. So the Liberal Party has, frankly, engaged in a disingenuous campaign which does them no credit.
Successive Australian parliaments, successive Australian governments have always wanted to ensure that our military superannuants and our veterans are treated in the best possible manner, and that's certainly what this government does.
JOURNALIST: Is there any worry for veterans being, you know, looked after, after they return from Afghanistan?
STEPHEN SMITH: We are very conscious of our soldiers who return from Afghanistan. We support, very considerably, the families of our fatalities. We support the soldiers who come back who have been wounded in battle. We also support the soldiers who have come back who have been injured in other ways, whether it's training or the ordinary run of their work activities. It's very important that is part of the Australian ethos and that is what the government does.
JOURNALIST: Labor's sort of got its own battle as well with the carbon tax. How is the general feeling within the party at the moment?
STEPHEN SMITH: Well, the general view within the parliamentary party is that we are trying to get through the parliament a major economic reform. There is too much carbon in our economy, there is too much carbon in our atmosphere. And we are trying to effect a major structural reform.
Doing that is always tough and the Prime Minister is doing a very strong and determined job in arguing our case to the community. And we are confident that we'll get the necessary legislation through the parliament that will see our reform in place from 1 July next year.
And once the public experience it, we're very confident that as we approach the next election in the third or fourth quarter of 2013 that we will have the support of the Australian community and get ourselves re-elected.
But any reform, whether it's the floating of the dollar, whether it's reduction of tariffs, any reform is a hard and tough slog, and we're currently going through the hard and tough slog of persuading the Australian people that what we're proposing is in our long-term interests.
We need to reduce the amount of carbon in our atmosphere, we need to reduce the amount of carbon in our economy. That's what our reform program does.