Minister for Defence - Doorstop with Prime Minister Malcolm Turnbull, Minister for Industry Christopher Pyne and Chief of Navy Tim Barrett, Osborne, South Australia Tuesday, 26 April 2016

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Senator the Hon Marise Payne

Minister for Defence

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  • Henry Budd (Minister Payne’s office) 0429 531 143
  • Defence Media (02) 6127 1999

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26 April 2016

Doorstop with Prime Minister Malcolm Turnbull, Minister for Industry Christopher Pyne and Chief of Navy Tim Barrett, Osborne, South Australia

Tuesday, 26 April 2016

Subjects: Submarine contract, ASC, South Australian jobs


Very good. Well I am proud to be here as Prime Minister, with the Minister for Defence, the Minister for Industry and the Chief of the Navy to announce that Australia’s future fleet of submarines, our future submarines, twelve regionally superior submarines will be built here at Osborne in South Australia.

They will be designed in partnership with DCNS, the French naval shipbuilding company. As you know we have gone through a competitive evaluation process that the Minister for Defence will describe and which she has overseen - it’s thoroughness, its objectivity. We’ve received offers as you know from TKMS of Germany and the government of Japan, and I want to thank TKMS and the government of Japan for their proposals which were of a very high quality. However, the recommendation of our competitive evaluation process of the panel - the Department of Defence, the experts who oversaw it – was unequivocal; that the French offer represented the capabilities best able to meet Australia’s unique needs.

This is a momentous national endeavour. This is securing, together with our commitment to surface vessel construction, this is securing the future of Australia's navy over decades to come. The submarine project alone will see Australian workers building Australian submarines with Australian steel, here where we stand today, for decades into the future. 50 years from now, submarines will be sustained here, built here. Surface vessels will be built here, because of the commitment we have made to this great national endeavour of building Australia's navy of the 21st century.

We do this to secure Australia, to secure our island nation. But we do it also to ensure that our economy transitions to the economy of the 21st century. That we have the technology and the skills and the advanced manufacturing and the jobs for our children and our grandchildren for decades to come, because we know that the advanced manufacturing, the skills that will come from this investment, from these projects, the submarine project alone will generate an additional 2800 Australian jobs. The spin-offs into the rest of the economy will be immense. The defence industry is at the very cutting edge of technology. It has to be the best.

These submarines will be the most sophisticated naval vessels being built in the world and they will be built here in Australia. Built in Australia with Australian jobs, Australian steel, Australian expertise and this will secure our future security and it secures as does every lever of policy that we can engage, it secures our successful transition to the economy of the 21st century and the jobs which our children and grandchildren are entitled to expect. This is a great day for our navy. A great day for Australia's 21st century economy. A great day for the jobs of the future. Australian built, Australian jobs, Australian steel. Here, right where we stand.

I'll now ask the Minister for Defence to describe the very comprehensive process that has led the Government to making the decision today and then I will ask the Minister for Industry to discuss the implications for Australian industry and innovation, and then the Chief of Navy will conclude with his observations and then we look forward to your questions.


Thank you very much Prime Minister, colleagues, ladies and gentlemen. This is indeed an historic day for our nation's security, for our navy and for our Defence Force. These future submarines will be a vital part of our naval capability to 2060 and beyond.

Well beyond the life span of most of us who are standing here today. This is indeed a national endeavour. Today's announcement is all about capability. National security has been the number one driver of this decision. The decision is a natural progression of our Force Structure Review and our Defence White Paper and Defence Industry Policy Statement. It reflects the fact that we are a maritime-based trading nation and both our national and economic security are linked to the maritime environment of our region.

I want to speak about the competitive evaluation process which we have had underway to make this decision today. It has been rigorous. It has been methodical and it has enabled to us select the right international design partner. You will recall that the Competitive Evaluation Process was established in February of 2015. Conducted over 15 months, the CEP process has systematically evaluated each of the three proposals against Australia’s unique requirements. The CEP has been completed to schedule and based on that process Defence have provided unambiguous advice to the Government on which we have made our decision.

The process was led by the Head of the Future Submarine office Rear Admiral, Greg Sammut and retired US Rear Admiral General Manager Submarines, Stephen Jonson. It was overseen by an independent expert advisory panel, chaired by former Secretary of the United States Navy, Professor Don Winter, supported by Australian experts including Jim McDowell, well-known to many of you here in South Australia, Judge Dodds-Streeton, Ron Finlay, an infrastructure expert, who all have skills in complex defence procurements in probity and in program management. Over the process of the CEP, they engaged in excess of 60 separate meetings internationally and domestically to ensure the probity and absolute strength of the complex evaluation process - Competition Evaluation Process indeed.

The process has also been peer reviewed. Peer reviewed by US Navy Vice-Admiral retired Paul Sullivan and US Navy Rear Admiral retired Tom Eccles, both of whom have extensive experience in submarine programs. This has been a robust, a strong, a methodical and rigorous process.

As we detailed carefully in the 2016 Defence White Paper, submarines are a strategic capability providing Australia with substantial advantages in the challenging maritime environment in our region.

Our decision to expand our submarine fleet to 12 regionally superior submarines is a decision driven by national security. Indeed as set out in the White Paper, by 2035 around half of the world's submarines will be operating in the Indo- Pacific region. We need submarines with considerable range. We need the capacity to remain undisturbed and undetected for extended periods of time. We need submarines that are quiet, that have advanced sensor technology to detect other submarines. When we announced the CEP in February 2015 we made it clear that we required a submarine that had range and endurance similar to that of the Collins Class and superior sensor technology and stealth characteristics.

All of the bids submitted on that basis were comprehensive, detailed and impressive. They are the factors that the CEP assessed and overall as the Prime Minister has indicated DCNS's proposal best met Australia's unique requirements. I also want to acknowledge and thank the Government of Japan and TKMS of Germany for the effort and expertise that they contributed in making their bids to this very important process for Australia. They were all of very high quality.

Ladies and gentlemen, as both the Prime Minister and I have now said, this is a national endeavour. The decision that we announce today on the Future Submarines builds on the decisions on naval surface ships we announced last week, beginning with two of the first Offshore Patrol Vessels in 2018 and moving here in Adelaide to the more than $35 billion Future Frigate program in 2020, these submarines will also be Adelaide-built, Australian-made, Australian jobs and Australian steel.

For the first time these three naval ship building programs together secure a permanent naval ship building industry in Australia and naval manufacturing base in Adelaide.

Through the initiatives of the Defence Industry Policy Statement, we are strongly committed to supporting and increasing the engagement of the defence industry. We also have announced the establishment of the Centre for Defence Industry Capability here in Adelaide. This will be a vital link for Australian business, small to medium sized business and defence to enable them to engage in this process.

So Prime Minister, the announcement today is most certainly about capability, about the safety and security of our nation as we seek to acquire our Future Submarine. But it is also the largest regeneration of the Royal Australian Navy since the Second World War. It is about the thousands of jobs that will be created here in Adelaide and around the nation. It is about the certainty this will provide industry for decades to come and it's about getting on with the job.

Thank you Prime Minister.


Thank you, Minister. Good.


Well, thank you very much Malcolm, to you and to Marise and to Vice Admiral Barrett.

Today's announcement is very, very good news for the industry across Australia - for defence industry and in fact all industry across Australia.

Marise has talked about defence capability but there's obviously a massive investment through the Government's decisions over the last six weeks in the Australian ship building industry. In fact we've made more decisions in the last six weeks than Labor made in six years in Government to secure naval ship building. Today's announcement of 12 submarines, an Australian build, with Australian jobs, using Australian steel secures Osborne as the centre of the defence industry for naval ship building into the future.

The other decisions that the Government has made recently, the 21 Pacific Patrol Vessels, the 12 Offshore Patrol Vessels, the nine Future Frigates and today's 12 submarines takes to 54 the number of vessels that this Government has procured for our naval fleet into the future.

This of course means a continuous naval ship building industry for decades into the future, which all first world countries should aspire so. So today is a great decision for Australian industry, because the jobs that will be created in ship building is high technology, advanced manufacturing. So this decision plays in perfectly with the Government's innovation agenda because all the work that will be done, not just of course being building of the actual hulls and so forth, but everything inside is all about high technology advanced manufacturing. The Turnbull Government is setting up Australia as a regional leader in innovation and defence industry. So as the Industry Minister, the Defence Industry Minister, I'm very proud to be here today for this announcement.


Thank you. The Chief of the Navy.


Thank you Prime Minister. I think there's little left to say. But let me say clearly, obviously this is a great day for Navy but also a great day for Defence and dare I say it a great day for the nation itself.

Your Navy, our Navy is a national enterprise; it takes industry as well as Navy and other parts of Government to make it work. The announcement today has cemented that certain future for us in terms of what we will be able to deliver to Government.

Twelve submarines regionally superior is what this country needs. Navy will now work with industry, strongly with industry, to make sure we deliver on that promise to Government. Let me just say that it is a great day for Navy, it is a great day for the naval enterprise, it is a great day for the Government. Thank you.


Thank you very much. Do we have some questions.


Does this mean that Adelaide will get the entire process from start to finish of these submarines or do we just bolt them together with the steel for instance rolled in another State in Australia?


Well can I say to you the submarines will be built in Australia. There will be, obviously a supply chain which will include other parts of Australia but the bulk of the work, the vast bulk of the work, will be done here but as there are with every project there are contractors across the country and indeed, there will be components that will be sourced, the combat system for example, will be sourced in large part from our friends in the United States. So there are a range of components naturally, that will come from other parts of the country but the bulk of the work, the focus of the work, will be here in this shipyard where we stand today.


So has this decision upset America Prime Minister? Japan was clearly America's favoured ally in this?


Let me make a couple of observations there. Firstly, you can be rest assured that we have been in touch with all of the parties to the competitive evaluation process and all of our allies. Secondly, the choice of the submarine of the partner is a sovereign decision for Australia. Thirdly, you will have noticed the involvement of leading American submarine experts in our competitive evaluation process. Finally, as far as Japan is concerned let me just say this, that both Prime Minister Abe and I and our respective Governments, and I believe our respective nations, are thoroughly committed to the special strategic partnership between Australia and Japan which gets stronger all the time. It gets stronger day by day and we're committed to that. And we are committed to our strong trilateral strategic engagement between Australia, Japan and the United States.


Prime Minister was this the choice recommended by Navy?


Yes, this is as both the Defence Minister and I noted, this was the absolutely unambiguous recommendation from the Department of Defence that came through the competitive evaluation process.


Prime Minister, what are the cost implications of going for a full local build as opposed to a hybrid build and was that weighed up? And can you just expand on the use of local steel? Will that be Whyalla steel and what proportion of the submarines will be built using Australian steel?


Well let me go through this. Firstly the cost implications of an overseas hybrid or a local build were comprehensively examined and weighed up and were the subject of submissions from the three parties that made offers pursuant to the competitive evaluation process. So yes we have taken that into account. The characteristics of the steel that will be required will obviously await the completion of the design process, but our commitment is that that steel will be made - will be Australian steel.


Is the contract signed?


No, we have only - we have made the decision, we have advised - I've had my discussions with the President of France about this and we - and of course we've spoken to the other - to the Governments of Germany and Japan, naturally, and the negotiations to finalise the contract for the design partnership will commence immediately.


Will it be finished before the election?


I don't think that's very likely, no. But it will be commenced very shortly.


Considering there have been previous promises around the building of submarines in Adelaide, can you understand how without a signed contract there might be a level of cynicism around today's announcement?


Well, no.


You talk about local content. What percentage of local content is mandated under an Adelaide build?


Let me explain what my commitment is and what my Government's commitment is. I am determined that every dollar we spend on defence procurement as far as possible should be spent in Australia, and our commitment to that is precisely for the reasons that Marise and I and Christopher and the Vice-Admiral have spoken about. Because when we invest in Australian industry and jobs, Australian technology, we are strengthening our whole economy.

You see, a strong Australia, a strong and secure Australia does not depend alone upon the physical capabilities that our Defence Forces have. The ships and the planes and the submarines, it depends on a strong defence industry and we have not had enough continuous investment in our defence industry, in our advanced manufacturing. This is what our whole naval ship building plan demonstrates, a commitment across the decades, across the generations, that will see well past the middle of this century - ships and submarines being built here and the technology and the skills, the know-how, the science that will come from that, will not simply sustain a better navy, it will do that, but it will also ensure the spillover benefits right across the economy. So this is part of our plan for a stronger national 21st century economy. This is part of our plan for the jobs and growth of the 21st century.


There's been some talk in South Australia about the difficulties that South Australian politicians are facing at the election. How much do you think this announcement will help your politicians going forward?


That's a matter for distinguished political writers like yourself to consider. Thank you all very much indeed. Good to see you.


The Anzac Day terror suspect apparently [inaudible] that hasn't worked?


I'm not going to comment on a specific case as you would understand, but cases where young people, teenagers, are radicalised have become radicalised to the extent that they would take action or plan to take action are of the greatest concern to the Government and I believe to all Australians.

We have comprehensive measures to counter radicalisation and our security agencies are as you have seen, extremely alert. But it is important for all of us especially parents, to be alert to what our children are doing and if your teenager appears to be taking, acting unusually, taking an unusual interest in matters of this kind, then that is something that you should share with the relevant authorities in the city or the state where you live. Thank you very much.


Media contacts:

Henry Budd (Minister Payne's office)             0429 531 143

Defence Media                                                 (02) 6127 1999

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