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Senator the Hon David Johnston
Minister for Defence
12 November 2014
Mr Peter Horobin, President of the Submarine Institute of Australia
His Excellency Par Ahlberger, Ambassador, Embassy of Sweden
My State colleague Minister Joe Francis
VADM Tim Barrett, Chief of Navy, RAN
VADM Simon Lister, Chief of Material, Royal Navy
RADM Phil Sawyer, Commander Submarine Forces, US Pacific Fleet
RADM David Johnson, Program Executive Officer Submarines, US Navy Systems Command
Mr Warren King, Chief Executive Officer, Defence Materiel Organisation
Senator the Hon Stephen Conroy, Shadow Minister for Defence,
And the many government officials, company representatives and friends from France, Germany, Japan, Sweden, the United Kingdom and the United States who have travelled a great distance to join us here today.
It’s a pleasure to be here again with the Submarine Institute of Australia, in this year of the centenary of Australian submarines.
Thank you to Joe Francis for that welcome to Western Australia. It’s great to be opening this conference in my home state.
Today I will set a challenge for everyone present. Our goal is to deliver to our Navy a new class of submarine, that is superior to Collins, before the planned withdrawal date of the Collins class from 2026.
It is our goal because Australia’s national security and our $1.6 trillion dollar economy relies on the unencumbered use of the sea. Australia’s submarine force is our key strategic deterrent. Australia must operate the most capable conventional submarines in the world.
And given the sheer scale of submarine programs, it is only by working together as a team that will reach this goal.
Where Are We Now
Today, we find ourselves operating a capable but ageing submarine in the Collins - a programme that as a Government we are resolved to learn the lessons from – both good and bad.
And the task of replacing Collins is made more complex due to the former government’s inaction over seven years. The task to replace Collins is now urgent.
This government will not admire the problem or avoid the challenge. We will take action in our national interests.
The next generation of submarines must be fully available, capable and reliable from the start and be affordable through life at an affordable cost. We did not achieve either of these objectives with Collins and Defence and industry have learnt from that time.
Coupled with these concerns, we can not ignore the rising wealth of Indo-Pacific nations who are expanding their submarine fleets.
I am advised that by 2030, half of the world’s submarines will be in Australia’s broader strategic region.
As I mentioned earlier, and noting the significant lead time required to design and build a submarine, the Government’s decision on Australia’s future submarine is now urgent.
As this audience knows, it has been urgent for many years. Since I came to the Defence portfolio in Opposition in 2009 you have told me, both informally and on the record, that work should start immediately.
It should have started in 2009 and in every year since!
In February of 2011 the then head of the Future Submarine program Rear Admiral Rowan Moffitt said to me, in answer to a question in Senate Estimates, that a locally designed submarine based on Collins would take 20 years to be operational once a second pass decision had been reached.
So clearly the Government’s priorities are sustaining Collins, followed by the Future Submarine capability, schedule and cost. And I highlight the issue of schedule as being the most challenging constraint as I can not solve for time I don’t have.
As Minister, I have taken action and instructed Defence to undertake the work required to support a future Government decision about our next generation of submarines.
So while no decisions have been taken I certainly assure you this issue is a high priority for me and my colleagues in the National Security Committee of Cabinet.
And we remain true to our word on this issue. In September 2013 the Coalition Policy for Stronger Defence stated that “we will make the decisions necessary to ensure that Australia has no submarine capability gap with 18 months of the election and that decisions on the submarine fleet can only be made on the advice of our defence Chiefs”.
Reading some of the press recently, you wouldn’t think the Government is currently making any defence investment in South Australia. Of course, the opposite is true.
There has been almost $1 billion worth of Defence procurement and sustainment work being undertaken in South Australia this year, and over the next four years, there will be up to $4.2 billion in Defence spending for building and sustaining defence materiel in South Australia.
While I won’t speculate on exact numbers of submarines to be procured (and I have more to say on this a little later), I can say there will be more submarines and that means jobs for South Australia.
We have learned the lesson of Collins and the need to invest in a sustainment program from the beginning of the project. This is where the majority of submarine capability funds will be spent. New jobs will created. This will be an exciting opportunity for the South Australia, for Adelaide and indeed the entire nation will benefit. An Australian submarine for Australia’s unique requirements
I want to now turn to the strategic basis of Australian submarines.
Australia’s future submarines must fulfil our unique geostrategic circumstances.
Geographically we are an island continent, the world’s sixth-largest country by area. This unique geography means we have unique requirements for Australia’s future submarines.
We are a maritime nation and as such we need maritime security.
The truth is that Australia’s economic prosperity and security depends largely on the free flow of trade in the global market.
Seventy per cent of Australia’s exported goods and services, by value, travel by sea, an export trade worth more than $220 billion in 2012-13. Our economy also relies on imports by sea, including fuel.
It is clear to me that Submarines have a vital role in protecting Australia’s access to the sea, upholding our ability to trade and the security of our nation.
Australia needs submarines that are capable of stealth operations at long range over extended periods because they defend our interests far from our shores. They need to be powerfully armed and are an essential part of our national security capability now and into the future.
These areas, which are of great importance to Australia’s sea?borne trade and historically central to its defence, could involve operations at great distances from Australian bases and support facilities.
Australia’s new submarines must rely on a design that is capable of operating in these demanding circumstances.
And to answer the question of how many submarines I make the following important statements to any potential adversary that may contemplate harming Australia’s national interests at sea.
Today, our Collins capability puts the strong chance that an enemy may encounter an Australian submarine in our strategic maritime approaches.
The introduction of the Future Submarine capability will transform an enemy’s strategic calculation. They will know without doubt that they will encounter an Australian submarine in our strategic maritime approaches and if they fight they will lose.
Thus the language and the practice of strategic deterrence has entered our submarine vocabulary. And to generate this strategic effect a certain number of submarines will be procured coupled with a certain number of operational submarines crews.
And may I pause to emphasise that the crews, the young men and women who make an extraordinary commitment to our nation by working in the undersea world, are the most important factor in operational success and I consider it my personal obligation and my duty as Defence Minister to provide them with the best equipment.
But returning to the issue of the precise number of submarines, this will be the result of a capability equation. I can however say the number will be more than six.
Finally, I want to talk about the next steps in the procurement of Australia’s future submarine.
The way forward
As I mentioned earlier, Australia’s Future Submarine needs to have superior characteristics in stealth, range and endurance, sensor performance and hitting power.
We are in a circumstance where Australia does not currently have a complete submarine design or production engineering capability.
It is well over 20 years since a submarine was designed for Australia and already over a decade since the last Collins class submarine was launched. And the value of our sustainment industry supporting the Collins class must be preserved and cultivated as our most immediate submarine industry priority.
A study by the RAND Corporation estimated that a team of around 1000 architects, engineers and draftsmen would be required to design a new submarine and that such a team would take many years to come together from both here and off shore.
If we don’t act now, the costs of extending and sustaining the Collins will become prohibitive and we will face a capability and national security gap. This is completely unacceptable.
The former government sat on its hands for six years without making a decision on this crucial capability for the Navy, while moving $20 billion from the program out to the never never.
Shockingly, over the term of the former government, Defence spending dropped to levels not seen since 1938 - a cut or deferral of some $16 billion. All Australians should rightly be angered that our nation is in this situation.
You will have heard the calls for us to open this up to a competitive tender.
Let me be clear: the Government’s approach to acquire the submarines follows exactly the same process in place for all major defence projects since the 2003 Kinnaird reforms to Defence procurement.
This process has been used by previous governments.
There will be a thorough “two pass” Cabinet process, and we will receive advice from our Defence Chiefs and procurement experts to ensure we get the very best capability.
The Government will ensure that an appropriate acquisition process is undertaken to deliver the required submarine capability for Australia while ensuring value for money for the tax payer.
The important factor for Australia is to proceed into the design phase as soon as practicable. A strategic level plan is needed to move us through the process and into the important work for design, production and sustainment planning. This work is tightly coupled to the development of the Defence White Paper and further announcements will be made in this context.
And regardless of what future decisions are made, new investments and capabilities will be required in Australia.
In closing, I want to reiterate that we are at a critical juncture in Australia’s submarine capability.
Australia’s next submarine will have longer range and endurance than any diesel/electric submarine currently available off the shelf.
We must act soon if we are to avoid a capability and national security gap.
The introduction of the Future Submarine capability will transform an enemy’s calculation from a strong chance that they may encounter an Australian submarine in our strategic maritime approaches to a certainty that they will encounter an Australian submarine.
I am certain that Australian industry will have a pivotal role in Australia’s future submarine, and the Government is committed to supporting and growing the intellectual capital that Australian industry can bring to bear.
I look forward to working with you to get the right submarine capability for Australia, in the right timeframe, using the right Australian expertise.
I’m grateful for the opportunity to again express my support for your endeavours and hope that you will enjoy the conference.
Other related releases
Minister for Defence - Opening address to the Submarine Institute of Australia Biennial conference, Fremantle WA
Minister for Defence – Address to the American Chamber Of Commerce in Australia
Minister for Defence - Defence and Industry Conference 2014
Minister for Defence - Speech - Alliance 21 Conference, United States Studies Centre, Australian War Memorial