TRANSCRIPT: TRANSCRIPT OF INTERVIEW WITH PETER VAN ONSELEN, SHOWDOWN, SKY NEWS
TRANSCRIPTION: PROOF COPY E & OE
DATE: 15 MAY 2012
TOPICS: Defence Budget; Afghanistan
PETER VAN ONSELEN: Defence Minister Stephen Smith, thanks for your company.
STEPHEN SMITH: A Pleasure, Peter.
VAN ONSELEN: $5.5 billion out of the forward estimates. Why were you the Minister whose portfolio got gutted?
STEPHEN SMITH: Well every agency, every department, had to make a contribution to returning the Budget to surplus. A strong economy's good for all Australians, it's also good for Defence. So yes, we made a substantial contribution, we've ring-fenced some very important areas and whilst it is the case that some of those savings will be difficult, they are manageable and they're not going to operate against our people in the field overseas or our core capability.
PETER VAN ONSELEN: I want to get to the manageability of them in a moment, but you'd have to agree that Defence took the brunt of the cuts, certainly in terms of ministers and their portfolios. I'm wondering if you've felt like in a sense you were - you know, you were in the portfolio that was targeted for the cuts over others?
STEPHEN SMITH: Well no, Defence has got a large budget in the 2008-2009 Budget. For the first time over the four-year forward estimate period, Defence essentially went to a budget of $100 billion. When you look at the four-year forward estimate period for last year's budget, the overall total was $103.4 billion. This year it's $103.3 billion.
So in the overall scheme of things, if you like the quantitative difference one year to the next is $0.1 billion out of $103 billion. Now, that doesn't take into account real funding and the like, but it is a significant saving, but every department, every agency was asked to do so. But not every agency or every department has a four year, forward estimate $100 billion spend.
VAN ONSELEN: Do you accept though that the Government's not living up to what it hoped for in the Defence White Paper of 2009, the three per cent increase in real terms?
STEPHEN SMITH: Well certainly we are under pressure so far as the short and medium term financial arrangements for the White Paper 2009 are concerned. There's no point running away from that; we are under pressure. The White Paper 2009 had some budget rules of three per cent on average to 2018-19 and then 2.2 per cent for the next decade.
PETER VAN ONSELEN: And that's not happening?
STEPHEN SMITH: Well, it's not happening in terms of the three per cent average over the last couple of years, but we're not the only country who is under pressure so far as defence or military spending is concerned in the aftermath of the global financial crisis.
PETER VAN ONSELEN: That's true, but in our region, defence spending seems to be going up in a lot of powers. You're more comparing that to other Western nations that have been under pressure.
STEPHEN SMITH: Well in our region we remain - in our immediate region, in the South Pacific andSoutheast Asia- we remain far and away the biggest defence spender. So yes, we have taken a 5.5 cut over a four-year period but we're still over $100 billion and as I say, $0.1 billion out of $103 billion is the direct comparison. But we remain in the top 15 defence spenders, so we compete withCanadafor 13th - for 14th. That was the case last year, it's the case this year, and we're still the second-largest per capita defence spender.
So we continue to be far and away in our own region, Southeast Asia and the Pacific, the biggest spender. But we continue to be in the top 15 military defence and peacekeeping spenders.
PETER VAN ONSELEN: In terms of our capability though, how can we justify the delays to the aircraft that were otherwise coming online and the delays to the submarines when you think about the fact that defence obviously is the kind of area where the integrated nature of it is such that if, you lose one arm or the other, it becomes difficult for the whole operation to be in sync, losing that kind of capability does make it harder for Australian Defence Force doesn't it?
STEPHEN SMITH: Firstly, so far as aircraft capability is concerned, we've got 71 classic Hornets, we've got 24 Super Hornets and 12 of those are wired up for the potential to take the electronic warfare capability, the Growler, and that capacity is still there for us to make that decision.
What we have deferred for two years is when we buy effectively our first squadron, our first 12 Joint Strike Fighters and what we've done is exactly the same as my US counterpart Leon Panetta has done. A couple of months ago, he deferred decision- making on about 170 Joint Strike Fighters, so the Joint Strike Fighter project has had its delays, it's had its problems, and we're not the only country adversely affected. So that's a very good example of where a project is delayed through no fault of the Government, no fault of defence and the like.
PETER VAN ONSELEN: But more problematic than that is the submarine delay. I mean, I've been reading reports that the 12 new submarines are only likely to be fully online as late as 2050. I mean, that's an awfully long time.
STEPHEN SMITH: Well, it's the brave person who makes that prediction. What we've done with the 12 future submarines is to be very careful, very methodical, very exhaustive, very forensic about the start of the project, and we've done that for a range of reasons.
Firstly, we're doing it in the aftermath of the Collins class submarine, where we know we've had longstanding endemic maintenance and sustainment issues that have bedevilled that project effectively since the first sub went into the water in 1996 and the last sub went into the water in 2003, and all of our experience is that 80 per cent of the problems in a project are found in the first 20 per cent of it, so this will be the largest single defence project that the Commonwealth has seen, so we're entitled to take care with it.
PETER VAN ONSELEN: But there's a gap there though. I mean, that makes sense to me other than the gap in our submarine capability between when they all come online-
STEPHEN SMITH: Again, it's the brave person who makes that prediction with confidence. There is always a risk of a gap in capability when you move from one capability to another. That was the case with the Oberon submarine to the Collins. But when the Collins class sub went into the water, the design life of type was some 28 years, so on paper the Collins will last until 2031; that's on paper.
We're currently doing the exhaustive assessment as to whether that life of type is accurate or whether more years can be gotten out of the Collins, and there are a couple of points to make about that. Firstly, they have not been in the water anywhere near as much as we would've preferred, and that's why we've invested a considerable amount of effort in the last 12 to 18 months to try and improve that.
But secondly, the US Ohio sub for example had a designed life of type of 30 years and 40 years on they're still in the water. So is there a risk of a capability gap? Yes there is, but we have started the process of exhaustively assessing a range of options including military off the shelf. So I wouldn't be making those predictions. The biggest risk to our submarine capability frankly at the moment is the Liberal Party who refuse to commit themselves to 12 submarines, let alone the project.
PETER VAN ONSELEN: Well I'll be talking to the Shadow Minister about that later in the program.
STEPHEN SMITH: Well, you should ask him that question!
PETER VAN ONSELEN: And I definitely will. But the submarine capability is an interesting one, because my understanding is it's also a significant factor in relation to intelligence-gathering, and Australia is - you know, that's one of the things that we do well, I'm told, on the international stage. Yet having a gap in submarine capability puts us perhaps in jeopardy of our international standing with our allies in terms of our intelligence-
STEPHEN SMITH: Well, a couple of things. Firstly you shouldn't assume the gap, that's the first thing. Is there a risk- yes, there is, and we're very conscious of that. Secondly, I never talk about operations that we do, whether it's submarines or other platforms, particularly in terms of intelligence.
But what I can say is that when the Collins class submarine is in the water, it is a very effective submarine. So a lot of our effort in recent times has gone into seeking to improve the maintenance and sustainment, so that we'd get them in the water on a much more regular basis.
PETER VAN ONSELEN: Can I ask you about something that - the self-propelled artillery, which the decision not to acquire that is now in place - we're the only country of our sort of military standing that doesn't have self-propelled artillery, are we?
STEPHEN SMITH: Well I'm not sure that's right, but the judgement we've made is firstly we will continue to have towed artillery, whether it's towed and put into position by Chinook helicopters or whether it's towed by trucks and the like, and that will continue to be a very effective artillery capability. There were issues with the self-propelled howitzer, including the type of ammunition that we could use, but also it's 80 tonnes and it can't be moved other than by its own propulsion.
But I'm also not walking away from the fact that that decision to a very large extent was based on priority and finances and it was one of the projects, one of the very few projects, that we determined not to proceed with. But we will continue to have, obviously, a towed artillery capability and a very effective one at that.
PETER VAN ONSELEN: And can I ask you about the issue of the combat identification software for the ground forces? Now, this is basically designed to ensure that friendly fire isn't something that our troops suffer from. Now, this is also not going ahead. Isn't that a classic worrying element that doesn't go ahead in terms of the safety of our troops when they're in harm's way?
STEPHEN SMITH: Well no, that project has been delayed but the capability that we're looking for there is effectively also being garnered in other projects. So in the Defence Capability Plan, which was written under the Defence White Paper 2009, we had about 180 projects, 170 projects continue. Of the 10 that have been stopped or aren't going ahead, it's either because a change of scope or because another project has taken over that capability.
And so that's why it's erroneous to assert, for example, that the White Paper is no longer valid. In a capability sense, the vast bulk of the projects in the White Paper continue to proceed. There are a very small number, 10, where they've been overtaken by events and a small number where we've changed their scope and the self-propelled Howitzer is one example.
But the vast bulk of movement in the Defence Capability Plan is essentially delays to schedule. Now, in the normal course of events, that occurs on an ongoing basis, either because of technical difficulties or industry difficulties.
In this Budget, some are delayed as a result of financial measures but the vast bulk of the capability of the Defence Force continues to move through the system, and just as we have protected our overseas operations and our military numbers, so we're also protecting our core capability in the Defence Capability Plan.
PETER VAN ONSELEN: But Minister, you described it as erroneous [indistinct] sort of critical that the Defence White Paper course isn't continuing, but one of the advisors to the Government, no less, Ron - Ross Babbage, I should say - he's quoted as saying it's a deep falsehood to say that the plans of the White Paper are on-track. It's a complete and utter nonsense. That's one of the architects.
STEPHEN SMITH: Well, he was an advisor to Joel Fitzgibbon, one of a number of advisors. That's his view. He's obviously very deeply attached to the 2009 White Paper, but his view is erroneous. Yes, we are under a lot of pressure so far as the finances are concerned, but we're no orphan there.
The US, the United Kingdom, we've seen very deep cuts, and what we've tried to do is to effect our savings in a way in which core capability is protected and that when the fiscal position improves we can resume activity at a higher level. That's unlike the United States and United Kingdom, where they have chopped capability out or stopped doing particular functions.
Now, we have avoided that, and at the same time we've also left ourselves the capacity to continue to pick up core capability as we did after the Budget by announcing the decision to buy a military tactical airlift, the C-27, which complements our C-130s and our C-17s, and to continue to be able to - as I said earlier - acquire a Growler capability if we make that decision, and to see the vast bulk of our core capability - landing helicopter docks, air warfare destroyers - continue to be produced.
PETER VAN ONSELEN: But would you agree that in terms of percentage of GDP going into defence dropping down to just over 1.5 per cent, that's not sustainable in the long term, that's just a short term-
STEPHEN SMITH: Well there's no doubt that this government and previous governments have had an aspiration to be around or at two per cent of GDP and currently we're closer to 1.5 than two. So, obviously, I would prefer to be higher, but that's not the only measure. The Budget continues to be a defence budget over four years of over $100 billion. That's only been the case since 2009.
We continue to be the second-highest per capita expenditure of defence funds and we continue to be in the top 15. So whilst we are closer to 1.5, when you get to the last two forward estimate years, we are on the rise again. But the-
PETER VAN ONSELEN: Isn't that then just a case of the defence budget being curbed in the short term because of a political goal of getting to a surplus?
STEPHEN SMITH: No, when you look at the so-called budget rules of the 2009 White Paper, for the first time a government tried to set out a long-term pathway to financial certainty.
The White Paper also said that the events of the global financial crisis continue to unfold, that they were unfolding, and what we've found in the three or four years since the White Paper is that the effective double dip recession in Europe, United Kingdom in particular, Global Financial Crisis Mark II in Europe, and the difficulties that we've seen the United States economy suffer has seen not just Australia but the UK, the US, Canada, other countries under pressure for their defence spending.
So, in addition to all of the very good strategic reasons why we brought the White Paper forward a year to 2013 - and those strategic reasons include a drawdown from the Middle East after Afghanistan transition, a drawdown effectively from East Timor and the Solomons, plus the very important Force Posture Review which we put out which draws our attention again to the defence of Australia and our northern and western approaches.
In addition to those very important strategic reasons, there are also obviously good financial reasons as to why it makes sense to examine those issues in the White Paper context, not just in the day-to-day or budget-to-budget cycle sense.
PETER VAN ONSELEN: Just finally Minister, you mentioned Afghanistan and the drawdown there, that's obviously been in the press in the last few days. How confident are you that the Afghan forces are going to be able to take up the slack as foreign forces leave the country and we won't see a situation where the country goes backwards, when it doesn't have that kind of foreign support-
STEPHEN SMITH: We're very pleased that Uruzgan has been put in the third tranche of transition provinces - we're one of 11. So by the time the so-called third tranche is completed, 75 per cent of Afghanistanwill be under Afghan-led security responsibility.
PETER VAN ONSELEN: Are you confident that that'll be effective?
STEPHEN SMITH: Certainly in Uruzgan, we are confident that we'll get there by 2014 if not earlier. We've been pleased with - in the last 18 months - better progress than we thought we'd make in terms of training and mentoring. We've certainly made up a lot of ground on the security front and that's been reflected throughout Afghanistan.
PETER VAN ONSELEN: Because I'm sure Australians want the troops home, but in a sense there'll be this feeling of dejection if we're in a situation where the country goes backwards once the troops leave.
STEPHEN SMITH: And that's why we have made it very clear, the Prime Minister and I, that post-transition, post the end of 2014, Australia remains in the marketplace for really three things. Firstly, a long-term strategic agreement with Afghanistan, which we may well be able to sign in the margins of the Chicago Summit next weekend. Secondly, an obligation to - on the part of the international community, to fund the Afghan National Security Forces and Australiawill make a fair contribution to that.
But thirdly, to also leave behind some support for them, whether it's special forces for counterterrorism purposes, but also potentially advisors on the military front. And also specialist trainers, like officer training and artillery training.
So post-transition, Afghanistan will continue to need the support of the international community but in Australia's case and in other cases it will be with much less numbers. But it's important that we continue to give that support so that they can make sure that they take hold of security responsibility but also meet that into the future.
PETER VAN ONSELEN: Defence Minister Stephen Smith, thanks very much for joining us on Showdown.
STEPHEN SMITH: Thanks Peter, thanks very much.