Minister for Defence - Doorstop - Defence + Industry Conference 2014, Adelaide

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Senator the Hon David Johnston

Minister for Defence

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29 July 2014

QUESTION: (inaudible)
JOHNSTON: We’ll see how the full-cycle docking for HMAS Farncomb, the length of time taken and how successfully ASC can manage that will probably be the benchmark, that’s what we’ve got to wait on.
QUESTION: That’s for the submarines, what would you need to see, you say you want to see the shipbuilding, the AWD programme build up?
JOHNSTON: The shipbuilding programme is currently inside Government at the moment and we’re working on that, but the word is this: we cannot go forward with 150 man-hours per tonne in the face of a reasonably fluid benchmark of about 80. We are approximately double what we should be – that is not acceptable.
QUESTION: So that sort of a benchmark measure, that sort of man-hours per tonne?
JOHNSTON: Well the South Koreans are about 60 man-hours per tonne. We’ve set the task for the programme at 80 and we’re doing 150 - unacceptable.
QUESTION: What sort of timescale would you give them to get back to that?
JOHNSTON: Well we’ll start to see green shoots I think early next year as we get back on track, but it’s got to be driven day-by-day, week-by-week, and we’ll do that.
QUESTION: In terms of the ASC management, Steve Ludlam’s come to the end of his contract and is not renewing it so are they looking for somebody else? Have they appointed somebody at least in an acting role?
Is that a matter that you will leave entirely to the Board or…
JOHNSTON: Oh absolutely, as I must pursuant to the law. The Board has responsibilities there and we are the customer, Defence is the customer.
I talk to my officials regularly about the level of satisfaction we’re get, but issues of commercial performance are for the Board and for the Finance Department.
QUESTION: You make a reference there to a constant acquisition programme, is that directed at the Future Submarine purchase?
JOHNSTON: That’s one of the programmes that we’re looking to make sure that we get it right.
Now the Air Warfare Destroyer programme is extraordinarily complex; submarines are more complex by a magnitude of several numbers.
Accordingly, we are leaving no stone unturned to get the Future Submarine programme right, at the same time we have to sustain Collins.
This is a very tall order given we’ve effectively inherited a clean slate, not a lot has been done.
QUESTION: Do the prospects for South Australia on the submarines rest on sorting out the Air Warfare Destroyer contract alone?
JOHNSTON: As I said this morning the first priority, the very first priority, is to fix AWD. That is the benchmark; that is the test. If we can fix that we can go on, but if that isn’t fixed we have a significant problem.
QUESTION: Senator you said this morning that it wasn’t wise to make flagrant promises, but isn’t that exactly what the Government did when they said that 12 submarines would be built in Adelaide before the election?
JOHNSTON: We took the then-Government at its word that they’d done something, we now understand and know that not only have they not done anything, but they were actually taking money out of the submarine programme. That realisation has set us back on our heels, we have had to reassess the way forward and we are continuing to do that.
Now there is literally years of work up in getting to the point where we make a decision on submarines – that is how significantly complex the programme is.
As I said in my speech, they (the previous Government) launched a lot of press releases but not a lot of ships; they were all about political splash with no substance or funding.
We’ve had to go and find the money to go forward and we continue to have to deal with the mess that we’ve inherited.
QUESTION: You had the White Paper consultations (inaudible) with various enterprises and you’ve got this position about getting the AWD contract sorted out, is that perhaps reasonably interpreted as a softening-up process about SA not getting much of the work on the subs?
JOHNSTON: Well let’s just talk about Air Warfare Destroyer. There’s potentially 11, 6,500 tonne, highly-complex warships in the Future Frigate programme, virtually all for South Australia – that’s what’s at stake.
If anyone wants to say to me ‘oh that’s not worth worrying about’ or ‘that’s something that’s not worth considering’ I’ve got to tell you that is probably one of the biggest defence projects ever being given as an opportunity to any state in Australia, they need to grasp it with both hands.
QUESTION: Defence Industries Minister Martin Hamilton-Smith made the assertion yesterday that SA had been promised the lion’s share of the work on the Future Submarine fleet, do you agree or disagree with that assertion?
JOHNSTON: Submarines are sustained almost exclusively here in South Australia; the Collins was built here in South Australia.
Industry support is here in South Australia, but let’s just remember this is a very complex, difficult programme and accordingly we are having a lot of trouble with what is going on in South Australia in terms of maritime naval acquisitions right now.
The White Paper will set all of this out. We are not going to give low currency, low value promises in the circumstances of what we know and what we’ve inherited.
We are working diligently to come up with a feasible, fundable, viable, credible programme into the future for naval acquisitions centring around South Australia.
QUESTION: Have you had a cooperative relationship with the South Australian Premier and the Government?
JOHNSTON: I’ve had a very cooperative relationship with the South Australian Premier, he’s been very supportive, but of course the commercial issues that are confronting us at the moment are not his problem.
We’ve got to make sure that these particular ships are built in a productive way. The taxpayer is not a bottomless pit of money and I for one will not tolerate 150 man-hours per tonne against a benchmark of 80, that is just unacceptable.

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