Minister for Defence - Defence Teaming Centre breakfast – Adelaide, South Australia

Subjects: Shipbuilding, submarines, Defence White Paper

MINISTER PAYNE:

Good morning ladies and gentlemen and David, thank you very much for your very generous welcome and to Chris Burns, Jack Mahoney, to the Premier of South Australia, Jay Weatherill, Opposition Leader, Steve Marshall, to Sir Angus Houston, and many other parliamentary representatives and I think Matt Williams is here somewhere, and Senator Nick Xenophon as well. The Senate’s very well represented this morning.

Let me first, before I begin, also acknowledge the traditional owners of the land on which we meet and pay my respects to their elders past and present.

I want to thank the Defence Teaming Centre for the opportunity to speak here this morning. I’m very pleased to be able to do that and I really do appreciate your attendance in such numbers so very close to Christmas. It is very gratifying to see the enthusiasm of your interest and engagement.

The Premier and I were just discussing when I might turn my mind to reading David’s report, we think probably Christmas Eve, sixish, sevenish that evening is probably in the target time frame. This is certainly an opportunity in a portfolio that lends itself to a lot of serious reading and the Christmas period is shaping up to be a very, very slow paced one as a result.

Ladies and gentlemen, I was in Adelaide about a month ago with the opportunity to attend the Submarine Institute of Australia’s conference and in fact met with the Premier on that occasion, and it’s very pleasing to be here once again to meet with a number of other Defence industries and to have the chance to speak with you this morning.

I don’t necessary need to tell you but I do think it is important to place on the record the importance of the state of South Australia as a centre for Defence industry. You have around five to six thousand people at least working in the Defence industry here and this financial year Defence itself expects to spend about $1.2 billion on major Materiel Acquisition and Sustainment Projects in South Australia.

At the Edinburgh Defence Precinct and Technology Park many of you support some of our key capabilities, such as the Orions, and work closely with Defence and the Defence Science and Technology Group as well and I am constantly reminded of the importance of that particular group within our organisation and the opportunities and innovation that it brings to the work it does with so many of you. And a lot of that is based on niche technology that has been developed right here in South Australia. And as we seek to expand and improve the capabilities of the ADF, we are going to need all the know-how and all the innovation that you are able to bring to the table. That is gong to be a very strong two-way relationship and one which I’ll come back to in just a moment.

You’re also of course, in South Australia, home to one of our nation’s most important strategic assets – the Woomera Test Range – which has been subject to some public discussion recently, not necessarily in the Defence context, but most certainly in the FIRB context. When I point out to people that the range is the size of England and provides Australia with one of the largest, most important Defence testing ranges in the world, many are surprised, but nobody doubts its strategic importance and its value in that regard.

Since the Prime Minister appointed me Defence Minister just a little less than three months ago, it has been one of my priorities to ensure that the relationship between industry, Defence and Government remains open and robust. And no matter where I meet with Defence industry representatives, Canberra, Adelaide, Perth, Sydney, and so on, I am absolutely assured by most of those engagements that the relationship is a very robust one, and I think that’s very important. I would encourage you to be frank and engaged in the discussions you have both with me and with Defence itself.

At the same time, as the Prime Minister has become fond of saying, there’s never been a more exciting time to be an Australian, I have to say there’s never been a more exciting time to be the Defence Minister of Australia. And I think that is especially true for those who are involved, particularly here this morning, I acknowledge, in the naval shipbuilding industry and in the Defence industry more broadly here in South Australia as well. As you know over the coming decades, the Royal Australian Navy will undergo its most significant period of regeneration literally since the Second World War.

Modernising our future naval capability will be critical to achieving the future roles and missions of Defence. So over the next 20 years, the Government will invest tens of billions of dollars in the acquisition of new submarines, Future Frigates, and Offshore Patrol Vessels. And as part of delivering the new capabilities for the Navy, we are also fundamentally reforming the way we acquire those naval vessels and in parts as referred to by Senator Fawcett in his opening remarks.

A key element of the Government’s Naval Shipbuilding Plan will be the implementation of a continuous build in Australia of surface warships and the implementation of a number of the reforms detailed in the RAND Report on Australian Naval Shipbuilding. This will address the peaks and troughs that have beset naval shipbuilding in Australia for decades and will go to providing certainty and stability for industry and, most importantly, for skilled shipbuilding workers here in Adelaide and across Australia.

As you know, the Government has already committed to the construction of the Future Frigates here in Adelaide, beginning in 2020. I’m pleased to confirm today that we have now also commenced a competitive evaluation process for both the Future Frigates and the Offshore Patrol Vessels, commencing with an Analysis of Alternatives. We’re getting on with this job of regenerating the naval capability and securing the long-term future of naval shipbuilding in Australia.

The Competitive Evaluation Processes for the Future Frigates and the Offshore Patrol Vessels will first identify the mature ship design options which are available in the market, and then narrow the field of designs for further development. That will occur at First Pass consideration, which is scheduled for 2016.The process will then consider the options and recommend a shipbuilder and associated designer to Government for Second Pass approval, which is scheduled for 2017 for the Offshore Patrol Vessels and 2018 for the Future Frigates. And, as you are no doubt aware, the Competitive Evaluation Process for the Future Submarine is also well underway.

Since the opportunity I had to address the Submarine Institute here some weeks ago, we have now received the three submissions from DCNS of France, from TKMS of Germany, and from the Government of Japan, all three received on the 30^th November 2015 by the closing deadline. Now the review of those submissions by Defence is currently underway and advice will be provided to government in 2016.

This is clearly an extremely important process, and it will take time. And let me be very clear about one thing; the Government won’t be rushed in making a decision of that nature and we won’t be rushed in Defence in terms of providing the best advice. We will give Defence the time that is needed to evaluate these complex proposals for what will be our most complex and costly defence procurement ever. Now, I know that the Defence Teaming Centre has been particularly active in this space and, as I said, I welcome, absolutely welcome, robust debate and exchange. But I do reiterate, the Government will take the time that is necessary to evaluate the proposals from the potential international partners. This is the decision which we must get right.

This process has been and will continue to be overseen by an Expert Advisory Panel to ensure that its conduct is fair and equitable and the evaluation of the proposals will of course also include an assessment of the level of Australian industry involvement that will be possible under each submission.

What the Future Submarine, the Future Frigates, and the Offshore Patrol Vessels do is present very significant opportunities. The Turnbull Government has a clear strategy for achieving a productive, cost?competitive and sustainable naval shipbuilding industry. To achieve that, we seek flexibility, we seek agility and innovation in delivery of capability and I’m very much looking forward to engaging with State Government and industry representatives on these matters.

A key aspect of the Government’s strategy is a commitment from industry to make the necessary investments, to provide the necessary skill base and to build innovative new construction practices in order to deliver highly capable, cost?competitive naval vessels. Together, I am absolutely confident that government and industry can work in the reform the naval shipbuilding sector but we do need to do that together, we do have an expectation of industry making what are necessary investments in order to achieve this goal and deliver this important capability. We do want to work with industry, talk about a work force that is going to be able to address a build the size of which we are discussing.

The delivery of future capability is part of the national defence enterprise and as a national enterprise what the Department of Defence should, and must do is to leverage both the industry and educational investments made across Australia as a whole, and I would seek your support, each and every one of you in this room to work with us to make that happen.

I just wanted to refer very briefly, if I may, to the Defence White Paper which will be released in the first quarter of 2016. The Defence White Paper will be accompanied by an integrated investment programme and, for the first time, that will bring together all Defence capability-related investments – in major equipment, infrastructure, Information and Communication Technology and in personnel – over the next decade. This investment programme will be realistic, it will be affordable and it will provide project approvals with clear timeframes. That guidance is intended to improve industry confidence to plan for projects including the development of infrastructure, skills and capabilities for the future.

When the Integrated Investment Programme and the White Paper are released we will also be releasing a new Defence Industry Policy Statement, which will reset and refocus the partnership between Defence and industry to deliver and support those defence capability plans in the White Paper. The new Defence Industry Policy will offer industry greater opportunities to build innovation, productivity and international competitiveness in the provision of goods and services to Defence. We have exactly the right Prime Minister to do that, we have exactly the right Industry Minister to do that, we have exactly the right Education Minister to do that, and, with a modicum of humility, I’d like to think, we have a good Defence Minister to do that as well.

Delivering the high technology future force, we know, depends on our capacity to partner with industry; and it will take innovation. The Turnbull Government is absolutely committed to this and I’m making sure that Defence is committed to this, and the challenge, coming back the other way, is to make sure that industry is ready to help drive this constructively and creatively.

2016 is certainly shaping to be a milestone year for Defence and Australia’s Defence industry, and particularly here in Adelaide. I’d very much like to take the opportunity to thank you for your engagement in a number of these very important processes thus far. From here it gets bigger and bigger, and hopefully, better and better. There is so much to do and 2016 is the threshold of so much of that work.

I suspect I’ll be seeing many of you, more of them, in the coming months of 2016 than you might like but, ladies and gentlemen, you’re stuck with me.

I might take this opportunity to wish you all the very best for Christmas and for a very Happy New Year. I hope you all have the chance, post your six o’clock readings on Christmas Eve, to relax and unwind after what has been an extremely hectic and exciting year itself.

It is a great pleasure to be here, I thank you very much again for the invitation and I look forward to doing this again in the future. Thank you.