TRANSCRIPT: JOINT PRESS CONFERENCE

TRANSCRIPTION: PROOF COPY E & OE

DATE: 3 May 2013

TOPICS: Defence White Paper 2013.

PRIME MINISTER: I'm very pleased to be joined here by the Minister for Defence Stephen Smith, by the Chief of the Defence Force, David Hurley, by our Secretary for Defence, Dennis Richardson, and by our ministerial team, including Warren Snowdon and Mike Kelly.

We have just launched the Defence White Paper 2013.

You've heard the remarks we've made on the launch and we're very happy to take your questions at this point.

There will have to be a limit to the questions because I am due to see the Sultan of Brunei and cannot run late for that engagement. So over to you.

JOURNALIST: Prime Minister, does this white paper presume that Australia will not face any credible military threat for the next 20 to 30 years?

PRIME MINISTER: What this Defence White Paper does is it reviews the strategic order of our region, which is of course changing as China rises.

And it recognises that pivotal to the strategic order of our region is the US-China relationship.

Now, we seek to work in our region to bolster habits of cooperation, to have strategic architecture, regional architecture, where nations come together and build the bonds of trust and cooperation that matter for the longer term.

But we're also very focused on the risks in that changing strategic order and that is canvassed in the white paper too.

For us that means that we have to be prepared and the Defence White Paper outlines how we are prepared for the changing strategic order in our region.

JOURNALIST: Prime Minister, how much is the change of focus is about [inaudible] China?

PRIME MINISTER: Well in this Defence White Paper what you will see is that our outlook on China is a continuing one.

There is continuity in our perceptions about China. We welcome China's rise. We seek to have a comprehensive and constructive engagement with China.

We work on that relationship, and of course I was in China very recently working on that relationship.

We also recognise that China's rise and its subsequent military modernisation is changing the strategic order of our region, and that the US-China relationship is pivotal to our region of the world.

And that's why, as I indicated in answer to the earlier question, we work on regional engagement and regional architecture.

We also do want to see as China modernises its military, transparency about that military modernisation.

We are here today being very transparent about Australia's defence posture and outlook, and we press for that kind of transparency.

JOURNALIST: [Inaudible] on China is different than it was in 2009. Is that a recognition that we don't see China as a threat that the Government did back then?

PRIME MINISTER: Well, our posture here has been one of continuity. We seek to have a constructive engagement with China, and we do.

We also recognise the changing nature of our regional landscape as China moves as a stronger economy than it was in the past, to invest in military modernisation.

And for us, how do you respond to that? Well, you respond by engaging in the region, shaping the work between nations that brings them together and builds habits of trust and cooperation.

We also in this very much recognise how pivotal the US-China relationship is to the future of our region.

JOURNALIST: I do recognise too, Prime Minister, the language has changed substantially from this document to what was produced in 2009 in relation to China?

PRIME MINISTER: Well, we've updated. This is an evolutionary document from the last white paper. There has been a fundamental continuity in our policy towards China.

JOURNALIST: What has China specifically done to allay concerns about transparency and so forth regarding its military expansion?

PRIME MINISTER: Well we continue to call for transparency on that military modernisation.

JOURNALIST: Prime Minister, in these times of fiscal restraint, is it appropriate to have all these expensive props around us here flown in for what is a party political announcement?

PRIME MINISTER: This is a Government announcement about a very important area. Indeed, there is no more important area of government's work than our Defence and our ability to defend our nation in the world, so this is an important announcement today.

The arrangements that have been made for the launch are comparable to arrangements that have been made for past launches of white papers.

JOURNALIST: Prime Minister can you just explain, on the options for future submarines, perhaps you or the Minister, are we looking at the possibility of an evolved Collins, or some other modern advanced submarine. Would that be a submarine we would design, or a foreign design that might be suitable?

PRIME MINISTER: Well, I will get Minister Smith to make some comments but if I could just answer your question first up by saying in this white paper there is some good news for South Australia.

South Australia is where our submarine work is focused.

What we are saying in this white paper is that we are now focused on either an evolved Collins Class submarine or a wholly new design. That would bring work to South Australia.

In this white paper too, we are very focused on the skills and capabilities that we would need for that submarine work. I will turn to Minister Smith for some comments on the design question specifically.

MINISTER SMITH: Well thanks very much Prime Minister. You might recall that some time ago I announced that we were looking at four options in terms of progress in the future submarine program: an off the shelf solution, a modified off the shelf solution, an evolved Collins design, or a wholly new design.

We've come to the conclusion, as reflected by the white paper, that an off the shelf submarine does not give us the strategic or the operational reach that we need for Australia's interests as a maritime country and continent.

So we have determined to focus now on either an evolved Collins design – we have recently entered into agreements with Sweden to enable us to together with Sweden have the intellectual property access to the Collins design, so we will progress that.

So far as Brendan's question, which was what does a wholly new design mean? It means precisely that.

We were also looking not just at an evolution or an evolvement from the Collins, but a brand - or wholly new design.

This is deeply significant because this design work, whether it's on an evolved Collins or a brand new design, necessarily needs to be done in Adelaide.

It narrows the focus and as I made in my remarks at the launch, the decision to utilise a United States combat weapons and communications system, also is a fundamentally important decision so far as the design is concerned. That very much sets the framework for the submarine itself.

Brendan, we will now engage in those aspects in assiduous detail. We have before us the largest single capital works program or project that the Commonwealth has seen.

We have been methodical, assiduous, careful in the preparation that we do. We have learned some painful lessons from the maintenance and sustainment of the Collins.

It's the history of such projects that if you make mistakes early in the piece, they are magnified later in the piece, and so we are doing this in an assiduous and methodical way.

That work continues, but there are some fundamentally significant decisions that we've announced and are reflected in the white paper.

JOURNALIST: The Super Hornets, the Growlers - what's the actual total cost of the additional 12, and what's the timeframe for their delivery?

MINISTER SMITH: Sure, well you might recall that in the context of the 2009 white paper, the Government announced that it would open the possibility or the prospect of the Growler electronic warfare capability by wiring up 12 of the 24 Super Hornets for the Growler capability.

Last year I made an announcement which indicated we were purchasing some long lead items to keep that option open.

And I announced in August of last year that we would purchase the electronic warfare capability Growler, effectively converting 12 of our Super Hornets.

As we've looked very carefully at our air combat capability transition, we've come to the conclusion that rather than wiring up 12 of our Supers, to leave 24 Super Hornets available for our air combat capability, we're best off buying 12 Growlers essentially of the production line and that's what we'll do.

In terms of the cost - the rule of thumb cost, and this is catered for, the purchase of the Growler is catered for in the forward estimates and you'll see that in the Budget down the track. Rule of thumb it's $1.5-$1.6 billion, but that is catered for in the Government's Budget decisions.

JOURNALIST: That's all up is it?

MINISTER SMITH: For the 12 Growlers, yes. And capital cost.

And in terms of any previous costs, it costs us, on paper we've said we'd allocated $50 million originally to wire up the 12 Growlers, in the event that's about $30 million.

The purchase of the long lead items will be taken in account by the United States and essentially rolled into as part of the new Growlers.

JOURNALIST: There was a perception that the Defence budget would again be cut. You're saying there'll be a small increase in real terms?

MINISTER SMITH: Yes, what the Prime Minister and I have both said in the course of our remarks is that when you go to the budget papers in a week or so's time, that the forward estimates for this year’s Budget will not just match the forward estimates for last year’s Budget, it will be a modest increase.

So those people who are out there predicting further deep cuts in Defence are wrong.

And I just also say this in passing, as I did in the last couple of days, people should always be wary of trying to discern the tea leaves, or make suggestions about the purchase of this or the purchase of that.

I saw people out there saying we were going to purchase a fourth AWD. There's never been a recommendation to me by the Chief of the Defence Force or the Chief of Navy to do such a thing.

So in the end, people should just read the white paper and read the announcements, but no further cuts in the Defence budget in the forthcoming Budget, indeed a modest increase.

And even though, Ian, I think that the secretary and the chief might bridle somewhat at the suggestion that this is a party political broadcast, I'll make a party political point.

What we now have so far as Defence funding and budget is concerned is an outbreak of bipartisanship.

The Opposition Leader has said that his position is no further cuts to Defence spending, and he has an aspiration for two per cent.

When you open the forward estimates you will see no further cuts to Defence spending, and an aspiration for two per cent – it’s called an outbreak of bipartisanship on Defence spending.

JOURNALIST: Why is there no reference anymore to a real growth of three per cent, and do you still hold that commitment?

MINISTER SMITH: No, we have made it clear that in the 2009 white paper we set out some Defence budget rules.

What we discovered over the time since then is that it's very difficult, if not impossible, to map out precise funding for Defence, or any other area of government when you are facing changing economic and fiscal circumstances. In this case it's called the global financial crisis.

So we've put our Defence budget onto a four year forward estimates model with a six year guide after that.

And those people who pretend to you that in the aftermath of the global financial crisis – the adverse consequences of which remain ongoing – you can commit to three per cent growth, haven't seen the historic structural changes that have occurred in Australian fiscal circumstance.

JOURNALIST: May I ask of General Hurley, given the issues we have had with the Collins Class submarines, do you have any concerns that it's entirely within Australia's hands to both have this transition of the existing Collins Class and also build this entire new fleet? There's not going to be any sort of capability gap?

GENERAL HURLEY: Thank you, Prime Minister. I think once you see the plans as are laid out in the Defence capability plan, our future development path for the new submarine, and the skills program that has been put out today, and most importantly the skills program is about keeping that white-collar concept, design element into the future for our development programs.  

So we'll be putting emphasis on maintaining those skill sets. We've already got skill sets in Adelaide in existence now that have allowed us to do that.

We understand the Collins, there's been enormous work done into the Collins over the last couple of years.  

Availability has improved enormously and I think we're on a good platform to take the project forward.

JOURNALIST: How relieved are you that you've not had to take a haircut in the Budget?

GENERAL HURLEY: If you look at my haircut, I'm always taking haircuts.               

JOURNALIST: But on a serious note?

PRIME MINISTER: He actually was serious about that.

GENERAL HURLEY: The Prime Minister should talk about Budget issues but I think this has been a good process where we've looked at the reality of the Government's fiscal position, what we need to do to preserve Defence capability into the future, and I think this has been a good outcome for all.

JOURNALIST: Will the ship building initiatives announced in this document prevent the job losses that the ship building industry has been predicting lately?

PRIME MINISTER: I will just say a couple of words and hand over to Minister Smith.

A decision has been taken to move some of the blocks of the air warfare destroyer to Williamstown.

That means that some of the predictions about there being insufficient work available during the middle of this year won't be realised, there will be work ongoing there.

Then, embedded in the white paper and in the associated material you now have is a set of considerations and timing of considerations for things like future supply ships and patrol boats, because we do recognise that we need to hold skills and capabilities in our maritime industry.

And so we've, in this set of documentation, talked about time-frames for consideration, so we can deal with this problem of the profile of work into the future.

So I will go to Minister Smith for some in-detailed comments on that.

MINISTER SMITH: The Prime Minister's dealt with the substance of it.

So far as Williamstown and the BAE workshop there is concerned, the Air Warfare Destroyer Alliance has made a commercial decision that four blocks for the third air warfare destroyer, which were destined for the Forgacs shipyard in Newcastle will be allocated to BAE shipyard in Williamstown.

That will see, both in Forgacs in Newcastle and BAE in Williamstown, work on the third AWD proceeding until at least the middle of 2015.

What that does, and work on the AWD in the ASC shipyard in Adelaide will extend beyond that because the integration work is done in Adelaide.

So that work will continue until the middle of 2015. In the meantime, that gives us the opportunity, as we've indicated, to bring forward consideration and build or purchase or acquisition of both patrol boats and our, very importantly, our replacement to our supply or replenishment ships, HMAS Success and Sirius.

So, given that we've got work in those two shipyards until the middle of 2015, we've got, we believe, time to make judgements about patrol boats and the supply ships.

In the meantime, a very important complementary document released with the white paper is the submarine skills study.

That shows that we need to smooth out the workflow, but we also need to, as the Chief of the Defence Force said, to retain, not just for submarines but generally, the skills and the capacity, whether it's designed, whether it's white collar, back of house and the like.

What we're endeavouring to do is, after a peak of ship building activity, three air warfare destroyers and two landing helicopter docks, which has created a spike of work, to smooth out the workflow so that either for submarine future program or for surface vessels like patrol boats, like supply or replenishment ships and, further down the track, future frigates, we retain the skills and the expertise and the workforce to be able to do those jobs.

JOURNALIST: Do you have any idea when we might actually see an operational squadron of JSFs?

MINISTER SMITH: Well, we are proceeding on the basis, if there are no further delays to the JSF and by the way, any delays to date or any future delays in the Joint Strike Fighter project are not something, in real terms, that the Australian Government or Australia itself or the ADF can influence.

We are in the hands of others, and that's why we've made decisions to protect our own air combat capability with the previous acquisition of Super Hornets and now additional Growlers.               

But on the current timetable which we have not disturbed we expect to see two Joint Strike Fighters delivered to us in the United Sates in 2014-15, and the first of our three squadrons arriving from 2020.

You'll see in the paperwork that we envisage that our ageing classics will be good for 2020 to 2022.

It is quite clearly the case on our own analysis, but also on US analysis, that the Joint Strike Fighter project under Admiral Venlet and now General Bogdan has improved, but there are still risks associated with that and we're not prepared to take the risk of a gap in our air combat capability or superiority.

But, on the basis of current arrangements, the first of our three squadrons of Joint Strike Fighters would arrive in 2020, and progressively over the years when you got to the 2030s you'd be in a position to make a judgement as to whether the squadron of 24 Supers would be replaced by a further squadron of Joint Strike Fighters.

But a mixed fleet of Joint Strike Fighters, Growler and Super Hornets is precisely what we'll see in the US Navy, at least until 2030-2035.

I think the Prime Minister has to go. Thank you.

PRIME MINISTER: Thank you very much.