TRANSCRIPT: INTERVIEW WITH PAUL HENRY, CHANNEL 10 BREAKFAST
TRANSCRIPTION: PROOF COPY E & OE
DATE: 4 MAY 2012
TOPICS: Defence Budget; Future Submarines; G20.
PAUL HENRY: Defence Minister Stephen Smith joins me now. Stephen, good morning to you. Thank you for your time.
STEPHEN SMITH: Good morning, Paul.
PAUL HENRY: How is that? I mean, is that figure about right? I mean, at the moment ballpark we're talking about $5 billion over the next few years in savings?
STEPHEN SMITH: I'm not proposing to go into that detail. That's a matter for the Treasurer on Budget night but what I made clear yesterday, together with the Prime Minister, is that there will be a substantial contribution from Defence to the Budget bottom line, to taking the Budget back into surplus and I announced yesterday that part of that will be delaying and deferring some capability projects and I mentioned a couple yesterday, in particular the Joint Strike Fighter project and moving that to a couple of years to the right, to use the financial jargon, will save about $1.6 billion in the Budget but further detail we will have to await Budget night itself.
PAUL HENRY: But, Stephen, you are aware of the full detail in the Budget. There are no sneaky things in there that you won't know about with regard to Defence, is that correct?
STEPHEN SMITH: Again, I have been, as you would expect, together with the Treasurer and the Finance Minister and the Prime Minister very closely involved in putting together the Budget so far as Defence is concerned.
There are some very important parameters that we have placed around it. This will have no impact on our operations overseas so-
PAUL HENRY: Frontline stuff.
STEPHEN SMITH: It won't reduce our effort in Afghanistan or in East Timor or the Solomons. It'll have no adverse impact on military numbers, no adverse impact on conditions and entitlements other than matters that were already in the so-called Strategic Reform Program and no adverse impact on the kit and the resources provided to troops about to deploy or on deployment.
PAUL HENRY: Right. I'm going to use the figure of $5 billion because obviously, for obvious reasons that I understand, you can't mention the figure but it seems to me that experts in their field have calculated at about $5 billion over the next sort of four years. How is it possible to defer that, to cut that and not affect our long term defence capability? How is that possible?
STEPHEN SMITH: Because what we've tried to do is two things. Firstly in the procurement or capability or acquisition area we are focused on our priorities and we're focused on making sure that the key 2009 Defence White Paper capability - submarines, Air Warfare Destroyers, Landing Helicopter Docks, Chinook helicopters - that they are still in the system, that they will still be delivered and we made an announcement about submarines yesterday.
PAUL HENRY: All right, let's just talk about submarines, for the sake of time, because how will they be delivered? You've deferred it. You've announced, what, $214 million to investigate whether we should build our own submarines or buy them from a submarine catalogue. We're only investigating that now. We'll run out of submarines. The current submarines won't be in service for very much longer.
STEPHEN SMITH: Well, our Collins Class Submarines went into the water between 1996 and 2003.
PAUL HENRY: Yes.
STEPHEN SMITH: And there's a design life of type for the Collins of 28 years which takes you to 2031 but that's an on-paper design life. We're actually doing the exhaustive assessment now and it's not uncommon for a submarine life to be extended. The US Ohio Class submarine, for example, had its life extended from 30 years to 40 years but we're very conscious of making sure we don't have a gap in capability.
But our submarine project, 12 Future Submarines assembled in Adelaide, will be the single biggest defence capability project that we've seen, indeed, the single biggest capital works project-
PAUL HENRY: If it ever happens.
STEPHEN SMITH: -the country has seen.
PAUL HENRY: If it ever happens. It may never happen. I mean, you don't even know that you're going to assemble them here anyway, do you? I mean, that's why you're spending $214 million to work out are you going to build your or not.
STEPHEN SMITH: Firstly, the biggest risk to 12 Future Submarines is the Liberal Party who refuse to commit themselves to that project but, having said that, we've got in South Australia-
PAUL HENRY: Versus you who committed yourself to it and then reneged on it.
STEPHEN SMITH: That's not right. We have announced yesterday that we remain absolutely committed to 12 Future Submarines. We need to because of the complexity and the size of the project - do the exhaustive work upfront. We're examining four options from a military off-the-shelf to a wholly new Australian design, including one of the options, a derivative of Collins which is our current submarine and we've got a lot of expertise and experience in that respect.
Given the difficulty we've had with the Collins you can't just leap into a project. You've got to be with an eye to value for money for Defence but, more importantly, an eye for value for money for the taxpayer, be absolutely forensic and meticulous and methodical about it and that's what we're doing.
PAUL HENRY: Can I just you a couple of very quick questions? Did you put up a real fight not to lose this money in your portfolio?
STEPHEN SMITH: I'm a member of the Cabinet and I work closely with my Cabinet colleagues to come to an outcome where we can return the Budget to surplus-
PAUL HENRY: But did you fight? Did you fight for Defence?
STEPHEN SMITH: I always fight for Defence. I always fight for Defence but it is as important to Defence as it is important to the nation that we return the Budget to surplus and Defence, like everyone else, is making a contribution to that but we're doing that in a way in which we protect our troops on the frontline, we protect the number that we have in the military and, at the same time, with the bringing forward of a new White Paper, we've got the capacity within these tight fiscal and difficult times to have a very close look at the delivery of capability into the future so we're doing that or we're adopting that approach to protect our long term strategic interests but also to protect our troops in the field.
PAUL HENRY: All right, finally, Stephen. Is Australia a middle power or a small power?
STEPHEN SMITH: We are in the G20 and whether it's this morning or whether it's next week, whether it's Wednesday morning after the Budget, we will still be in the top 15 Defence spenders. We'll be number 13 or 14 with Canada. So we are a considerable nation, we're a middle-sized economy, a middle-sized power and what we do needs to reflect that and when other people from different countries in the world look at us, one of the things they do say is we admire the fact that you have managed your economy through very difficult times. What we're now doing is trying to manage our economy, our return to Budget surplus and our Defence Force in the aftermath of the very difficult times that the global financial crisis threw up.
PAUL HENRY: Well, hopefully we're not going to spend a lot of time ruing this day, trying to play catch-up which is, in defence terms, a very expensive thing to do.
Thank you very much for joining us, Stephen. Stephen Smith, Defence Minister.
STEPHEN SMITH: Thanks, Paul. Thanks very much.