TRANSCRIPT: INTERVIEW WITH BARRIE CASSIDY, INSIDERS, ABC

TRANSCRIPTION: PROOF COPY E & OE

DATE:  3 JUNE 2012

TOPICS: Shangri-La Dialogue; US; China; Budget; White Paper; Asylum Seeker Boat, Enterprise Migration Agreements.

BARRIE CASSIDY: Good morning Minister.

STEPHEN SMITH: Good morning Barrie.

BARRIE CASSIDY: US Defense Secretary, Leon Panetta, yesterday further explained what he calls a rebalancing of American presence in the Pacific. Why will this not further disturb China about America’s intentions?

STEPHEN SMITH: Well, the United States presence in the Asia-Pacific has been a force for peace, stability and prosperity since the end of World War Two, and we welcome very much the fact that not only will the United States continue that engagement, it will enhance it, and that was reflected and reinforced by the speech, the presentation, that Secretary of Defense Panetta gave at the Shangri-La Dialogue in Singapore yesterday.

One of the most important things that we concede in the course of the first half of this century is a positive and constructive bi-lateral relationship between  the United States and China. That point was made, not just by Secretary Panetta, but by others including Australia and that’s the most important part of that nub of that relationship and the United States is working very hard at that.

The essential point is that none of this is done for reasons of trying to maximize or influence – concern or threat – its all done for purposes of stability, to continue peace and to continue prosperity.

BARRIE CASSIDY: And when we’ve got a situation like we’ve got already where the US, like Australia, is cutting back on Defence spending at a time where there is, I think you call it, the new distribution of power to Asia, clearly in those circumstances the United States can’t maintain it’s strategic dominance forever?

STEPHEN SMITH: Well again Secretary Panetta made a number of points yesterday of what he describes as, we have to meet national security challenges but at the same time we have to meet fiscal security challenges.

We are going through a tough fiscal time. The United States is taking out $487 billion dollars out of it’s defence program over the next 10 years and we’ve five and a half billion out of the forward estimate years and the current budget, and we are not the only ones – the UK, Canada and the like.

But, what the United States is doing is making sure that that doesn’t adversely affect its capacity in the Asia-Pacific. So the rebalance, includes just not a rebalance strategically, after a draw down from the Middle East, but also a balance of capacity from the Atlantic to the Pacific. And also making sure that defence forces are efficient using smart technology and the like.

But fiscal circumstance will change. We are going through a tough one at the moment but despite what some commentators have said, it’s not the end of the world. We continue to see the United States with a very effective defence force and we continue to see Australia making its contribution with an effective defence force.

BARRIE CASSIDY: I’ll come back to Australian defence spending, but in a speech last night you said that the United States will not be rapidly eclipsed overnight, but it will be reduced won’t it? It’s significance both economically and in a strategic sense, will be reduced over time?

STEPHEN SMITH: Well that’s effectively the point in the speech that I gave, in the speech that President Yudhoyono from Indonesia gave and also, effectively acknowledged by the United States.

We’re seeing the rise of China. We are also seeing the rise of India, which continues to be underappreciated. It’s not just the Asia-Pacific; it’s India and the India-Ocean Rim and also a substantial increase in the size of the ASEAN economies combined, let alone the ongoing economic and strategic importance of Japan and the Republic of Korea. Indonesia, of course, emerging now as a global influence not just a regional influence.

So, these changes of strategic significance, the changes in economic, political and military weight, do require adjustments and the United States, Australia, China, India and our region are adjusting to that. It’s how we manage that adjustment and manage that for good stability and prosperity reasons, that’s the most important objective we have and the central challenge that we have in the coming decades.

BARRIE CASSIDY: Well you’re going to travel to China tomorrow, as I understand it. The rotation of US Marines through Darwin will clearly be an issue. Foreign Minister Bob Carr just got back from China, has he given you a sense of what you can expect when you get there?

STEPHEN SMITH: Well, Bob and I have obviously spoken about that. But the point I’ll make to Chinese friends is that Australia has had a growing relationship with China since we were one of the countries to recognise China very early back in 1972. We’ve had a growing relationship for 40 years. We now have a comprehensive relationship, very strong economically. We conduct a strategic dialogue with China and we also have a growing military to military and defence to defence relationship which we continue to enhance, and none of that has been adversely effected by our over 60 year alliance with the United States.

So this can be win-win, and that’s what we want it to be. It’s not a zero sum game. We can have a positive, constructive and comprehensive relationship with China and at the same time continue an alliance with the United States which has served Australia well for over 60 years and continues to be the bedrock of our strategic and security fundamentals and underpinning. 

BARRIE CASSIDY: There’s a report in the weekend media about a secret chapter in the 2009 Defence White Paper and it seemed a war game - a scenario - that had Australia alongside the United States fighting an air and sea battle with China. Does that exist?

STEPHEN SMITH: Well, it’s not the first time I’ve seen that suggestion.

It was a nonsense when it was made previously and it’s a nonsense now . Of course with the preparation and the finalisation of any White Paper in 2009 when that paper was finalised, there was a public version that was published there were also classified sections, but the essential point is that the White Paper 2009 was not aimed at any one country. It wasn’t aimed at China, it was aimed at those changing strategic circumstances that I’ve referred to and the 2013 White Paper that we will publish in the first half of next year, won’t be aimed at any one country either. It will deal with the changing strategic circumstances; it will deal with the drawdown from the Middle East, from Afghanistan and our drawdown from stabilisation forces in the Solomon Islands and East Timor. It will deal with the force posture that we need to look at for our northern and western approaches, so it’s not aimed at any one country. What it is aimed at is maximising the protection and defence of Australia’s national security interests.

BARRIE CASSIDY: Do these secret chapters, and you’ve conceded that there is secret material, do they deal with these sorts of hypotheticals?

STEPHEN SMITH: Well Barrie, it’s not a matter of conceding, its on the public record for a long period of time including the publication of the 2009 White Paper that there was a public White Paper which was published for all to see but there were classified sections.

BARRIE CASSIDY: Yeah, ok, but do the classified sections deal with hypotheticals? Such as war games with China?

STEPHEN SMITH: The classified sections don’t deal with the sort of subject matter or the sort of content that is asserted in the book or the article that you are referring to. 

BARRIE CASSIDY: Ok, when you mentioned Defence spending before. You talked about commentators, but one of the commentators is retired Major General John Cantwell. He told the ABC this week that the budget was a shocker for Defence and it puts the countries Defence capabilities at risk.

STEPHEN SMITH: Well, I don’t share that analysis just as I don’t share the analysis of one commentator who said that it was the worst day for defence since the fall of Saigon, nor do I share the analysis of another commentator who said literally as we speak people would be planning the invasion for 2028 to 2030, nor do I share the analysis that somehow the Budget is a threat to the United States alliance and dealing with some of those in reverse order:  If it was a threat to the United States alliance, Secretary Panetta might have said something to me over the weekend. He didn’t do any of those things; in fact, he congratulated us for the contribution that we make.

We’re going through a tough fiscal period and what we’ve done in the Budget is to make sure that we ring fence and protect essential elements of our defence contribution at the moment. So, no adverse impact on our contribution in Afghanistan or East Timor or the Solomon Islands; No adverse impact on the kit given to our forces who are deploying; No adverse impact on what we are doing with the United States in terms of their global force posture review in the northern territory and protection of our core capability. So, the core capability will continue to arrive - landing helicopter docks, Air Warfare Destroyers, planning for the submarines, planning for the Joint Strike Fighter, so to assert that somehow a reduction of five billion dollars out of a four year forward estimates program of over $103 billion is a complete nonsense.

BARRIE CASSIDY: One of those commentators said that you’re known around the headquarters as the minister for disarmament.

STEPHEN SMITH: Well, I don’t know what basis if there is any to that comment. Frankly I don’t worry about that. My focus is on doing things, which are in our national security interests to do.

We brought forward the White Paper and we’ve brought that forward for the strategic reasons that I referred to earlier.

We are going through a tough fiscal time, but in 2009 for the first occasion, the four year forward estimates Defence budget spend went over $100 billion. It was over $100 billion before the budget in May; it’s still over $100 billion. We remain in the top 15 Defence spenders.

So, to assert that somehow the alliance is in tatters, that the Black Hawks are leaving the roof of Russell – Defence Headquarters in Canberra as we speak, is nonsense.

We are going through a tough time but we are managing that, and we are not alone, as I said the United States, the United Kingdom, other countries are facing the same difficulty effectively as a result of the global financial crisis and it’s aftermath.

BARRIE CASSIDY: What do you know about the asylum seeker boat that went missing in 2009? Is it possible that Australian authorities delayed alerting Indonesia for four hours?

STEPHEN SMITH: Well, as you said in your intro Barrie, I’ve been back in the country for an hour, so I’m not pretending to be on top of all the details.

What I can say is that the information that I’ve got is that this matter was considered exhaustively at Senate Estimates, that the relevant authorities have published a chronology; that the published story today doesn’t accurately reflect any of those facts or figures or the assessment.

What I’m told is that when the information came through on the first instance, there were two possible suggested locations. Assets were deployed to those two possible locations and an assessment was made as to what was a better location or the definitive location, as soon as that was ascertained that was relayed to the Indonesian authorities.

So, in my experience, our relevant authorities when they are faced with a rescue at sea do everything they can and the more general underlying point is that this just reinforces what we have been saying for some time is that we don’t want people smugglers putting people on boats so they put themselves at risk.

We saw the Christmas Island tragedy at the end of the year before last, this is another potential tragedy we won’t know in the end if the boat was actually there but there has been no further trace of it, so your heart sinks at the prospect of that.

But we want to stop these boats coming, we want to stop people smugglers putting them at risk, that’s why we want offshore processing, but in my experience our authorities do everything possible that they can in the face of the need for a rescue at sea.

BARRIE CASSIDY:I just want to ask you finally as a West Australian about the overseas workers issue, your colleague Gary Gray is under attack from various trade unions put out an advertisement, a poster advertisement in Perth attacking - Is this not understood, even in Western Australia that there is a need for overseas workers?

STEPHEN SMITH: Well I think that attack on Gary is both unfair, not justified and not soundly based.

One of the Unions who have put their name to that is the Maritime Union of Australia, they might just want to dwell on the strong support that Gary had for the shipping industry legislation that went through during the week, that’s the most important thing for their industry.

But I think that when people dwell on the challenge of making sure we continue to get capital investment in out minerals resources industry, not just in the west but generally. 

What the minerals industry says to me at the moment is that one of their biggest challenges is getting the necessary skilled workers to get projects up and running and without the skilled workers they can’t get the investment from the investment industry to get the projects up and running.

So here we’ve got a policy that the Government adopted not in this years budget but in last years budget, it essentially says that we will make these arrangements to bring the skilled workers but we’ll only do that after we have exhausted every last possible effort so far as Australian skills, Australian workers and Australian jobs are concerned. 

But essentially we’ve got a project here, which is bringing a massive capital investment to Australia; 8000 jobs, some of those jobs are necessarily overseas workers because we can’t find the Western Australian or the Australian workers with the skills and Gary has strongly supported that outcome and that’s to his credit.

BARRIE CASSIDY: And now you’ve got this Caucus oversight, is there not a risk that this will slow down the process and perhaps even become a rallying point for those opposed to the policy?

STEPHEN SMITH: No I don’t think that’s right, it was a very good discussion in Caucus. People in Caucus, my Parliamentary colleagues are very conscious of the need to continue to create employment, the need to make sure that young Australians get the chance at those jobs first, but also the realisation that there will be some big minerals resources or petroleum resources projects where the skill set are simply not available in Australia.

Once we exhaust the Australia skills supply, once we make sure that there is no Australian with the necessary skills still looking for that job, then we can move to the Enterprise Management Arrangements that we have outlined.

But what we want to continue, is to continue to get the investment coming to Australia, the capital investment that has been an unambiguously good thing for Australia since Federation. That’s what creates economic growth and it’s what creates the jobs and that’s what we want to continue to see.

Our priority since coming to Government has been to keep unemployment low and to maximise employment and on any measure we can hold our heads up very high not just in Australia but internationally as a result of the work the we have done on that front.

BARRIE CASSIDY: Minister, thanks for your time this morning.

STEPHEN SMITH: Thanks Barrie, thanks very much.