Submarine Institute of Australia - Conversation with Michael Fitzgerald

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The Hon Richard Marles MP

Deputy Prime Minister

Minister for Defence

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02 6277 7800

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8 November 2022

RICHARD MARLES, DEPUTY PRIME MINISTER: Thank you, and can I start by acknowledging the Ngunnawal people, the Traditional Owners of the land on which we meet and pay my respect to elder's past and present. I'm looking at a room full of dignitaries, so I'm a little nervous about starting to ad-hoc go through a list of acknowledging dignitaries, but I do particularly want to acknowledge Kim Beazley, who has been many things in relation to his career, but amongst those things is very much a mentor of mine, so it's really great to see you here Kim. We've got the Chief of Navy as well, Vice Admiral Hammond, so it's great to see you also.

When we – when this meeting happened, the Strategic Conference, happened last time, two years ago it was a very different world. At that point in time, the successor to Collins was 12 Attack-class submarines, diesel-electric, that we were building with the French and at conferences like this when people like you were asking ministers like me about whether we would consider walking down a nuclear path, you would get very short dead bat answers to those questions which encouraged everyone to move on. And now here we are two years later, and the successor to Collins is a nuclear capability that we are working on with both the United States and the United Kingdom, with an announcement due on the optimal pathway in the first half of next year.

I will save my substantive remarks in respect of all of that for the Q&A that I do with Michael, but I do want to say this to all of you in this room: When I first became shadow minister for defence, back in 2016, it was clear to me that submarines mattered. But if I'm being really honest, I didn't quite understand why they mattered. And now, I hope I do. But I really want to thank everyone in this room and this organisation for promoting discussion and debate around the single most important capability that we have within the Australian Defence Force which builds Australia's strategic space, and that's particularly the case in a world where our strategic circumstances are much more complex and much more precarious. So getting the debate right, and making the right decisions has been, is more important now, and the stakes are higher now than they have probably been at any point since the end of the Second World War. In that context, this discussion, this meeting, and the contribution that you all make is so profoundly important. So I really did want to say at the outset of this conference a big thank you, a big thank you for all that you've done in promoting what I think is one of the most critical conversations in defence policy in Australia today. So with those opening remarks, I might come and join you, Michael.

MICHAEL FITZGERALD, SIA PRESIDENT: I want to extend my congratulations on your appointment as Deputy Prime Minister and Minister for Defence, and our gratitude for you opening this conference. For those who have been to many of these conferences you'll know that in various guises you've been a supporter of this conference back to 2016 (inaudible) as you indicated, there’s been a complete change in the environment. Much has happened since you last addressed the SIA in 2020, we were 700 kilometres apart, the conference was virtual, and upon the conference with virtual (inaudible) and I think that’s somewhat a reflection of where the nation has come over that time. The government has changed, and perhaps most surprisingly, the self-proclaimed greatest team of all are the reigning premiers, in undeniably the greatest sport. I could talk about AFL all day –

DEPUTY PRIME MINISTER: I will talk about AFL all day.

FITZGERALD: As a Melbourne supporter I’m not sure we’ll get common ground, want to  by the show get common ground. We have long memories and we stop in 2021. So, I'd like to start, but perhaps more so in your office as Deputy Prime Minister with a bit of a view from the top. As Steve indicated, the theme of the conference is around challenges and opportunities. I started concentrating on the conference organisation too late, I would prefer opportunities over challenges. So, if we go to there, before we started talking specifically about submarines, what sort of opportunities for Australia as a nation, are coming from a program like this?

DEPUTY PRIME MINISTER: Well, that's a good question. In terms of the walking down the pathway of a nuclear submarine?

FITZGERALD: A nuclear submarine, and the industrial undertaking of this scale.

DEPUTY PRIME MINISTER: So there's a few answers to that. Perhaps the starting point is to answer it in a strategic context, which is that the opportunity fundamentally, in walking down the pathway of developing a nuclear powered submarine capability, is to have the capability to build Australia's strategic space in a much wider range of circumstances that are potentially there facing us in the future, than that what I really think (inaudible) since the end of the Second World War. And I put that in, it's kind of significant terms, meaning building strategic space and making sure that we have capability - defence capability in Australia, actually, I think goes to our ability to maintain the way of life that we’ve enjoyed into the middle of this century, in I think could be a much more precarious and potentially much more dangerous world. And so, the nuclear powered submarines, I think, are absolutely fundamental. Probably the most fundamental piece in that puzzle. And I think it is important to start by making that observation because as we walk down this path, often we think about, you know, the kind of defence industry dividend and the technological dividend for the economy. All really important, but we need to analyse this from the point of view of strategic purpose first. That’s the dog, and the rest is the tail. It’s really important that we have a clarity of thought going forward here, where tails don’t wag dogs.

There is though a significant tail, and that is that in developing the ability to make a nuclear powered submarine in Australia, not the reactor but the rest of it, is a huge undertaking, we will do and from that is going to have an enormous benefit obviously in terms of jobs, but in terms of what that can do around the place of science and technology within our economy. And I think if we kind of go off strategic policy for a moment, one of the great challenges for us as a country, as important as primary industry is – and it’s really important - we need to develop the human component of our economy much more. We need to climb the technological ladder, we really need to change and enhance our cultural relationship with science and start infusing science and technology throughout our economy. Making our economy more complex. This is a really important endeavour, which will help that. So, I think on a whole range of levels there are great opportunities that come from walking down this path.

FITZGERALD: Thank you Deputy Prime Minister. So, the Nuclear – perhaps – Submarine Taskforce is identifying the optimal pathway to acquire nuclear submarines. The Independently-led Defence Strategic Review has been established to better understand their investment and prioritise it, to ensure the security of the nation through to 2033 and beyond. And both will report to government in March next year. So there's still a significant amount of work being conducted by many experts (inaudible). So, by all reports those are going well, and recently Greg Sheridan writing in The Australian indicated that, and they are engaged with it. But, are they are they on track?

DEPUTY PRIME MINISTER: They are on track. So, perhaps let's start with the Defence Strategic Review. I mean, in essence in 2020 – actually, go back further, go back a lot further in 1985-1986, when Kim was defence minister, he commissioned Paul Dibb to do a review of our strategic circumstances and what should be our strategic response to that, which ended up being the Dibb review, which led to a 1987 white paper, which has really underpinned strategic thought in Australia, from then right through to now, really. The circumstances - but the tenet of all of that, was that if anyone meant to do us harm, we would be given a 10 year warning. In 2020 the former government, rightly, in its 2020 Strategic Update observed that for the first time we're sitting within that 10 year threat window. Big thing to say, right thing to say. But it begs the question, as a result, well what on earth are we going to do about that. Really, it’s seeking to answer that question, which is what the current Defence Strategic Review will do. In my mind it is the most significant rethink of how we go about strategic policy since Paul Dibb did his exercise back in 1985-86. And it really, in the context of a growing defence budget, needs to be thinking about what do we - what sort of Defence Force do we need? What is its job in the kind of world that we might face? Which is unclear, but potentially is a word which has really been unprecedented for Australia in a strategic sense since Federation, so there is a lot to think about in relation to all of that, and I think it does imply, I think a really significant reset in what we want our Defence Force to do.

I guess to give you some texture to that, I think increasingly we're going to need to think about our Defence Force in terms of being able to provide the country with impactful projection, impactful projection, meaning an ability to hold an adversary at risk, much further from our shores, across kind of the full spectrum of proportionate response. Now, that is actually a different mindset to what we've probably had before, and Dibb really thought about our strategic circumstances in the context of defending the continent being – (inaudible) I’m very crudely simplifying here - defending confident, kind of being able to be a significant player within our region, being a good global citizen. Three concentric circles. Now, I think it is impactful projection, is I think, actually where we need to be going and once you think about that; what capability do we have right now which enables us to do that? Well, actually, there's a lot of work we need to do, but a long range capable submarine does impactful projection more than any other platform that we have within our Defence Force right now, which is why it's so important that the Defence Strategic Review is being aligned to the work that we're doing with our AUKUS partners – the United States and United Kingdom - in determining what our optimal pathway is in relation to submarines, because these things go hand in hand.

The specific answer to your question is, you know, they are on track. Last week I received the first interim advice from Sir Angus Houston and Stephen Smith. We are in a position to hand out the Defence Strategic Review in the first quarter of next year. That's the same time as what we're trying to do with the assessment of where we go with submarines, in respect of that. We’ve got AUSMIN in the first part of December, and then subsequent to that we are hoping before the end of the year to have an AUKUS Defence Ministers meeting as well. And you know, the optimal pathway is starting to take shape. So we feel pretty confident that we're going to be able to meet the timeline of both, really, these two critical pieces of work by the first part of next year. You know, from where I sit and think about it, both pieces of work together are going to underpin, I think, defence thinking and defence policy in this country for decades to come.

FITZGERALD: So as you sort of remarked recently in Hawaii, you don't build a nuclear powered submarine quickly, so regardless of the options presented by the taskforce, and then what’s chosen by governments, we’re some way from seeing a fully trained and supported force of nuclear powered submarines flying the Australian flag. Do you have any advice - you know we’ve bought together here leaders from the public sector, the private sector, academia - do you have any advice for delegates, of the types of areas that they really should be thinking about investing in as we embark on those first steps in the program?

DEPUTY PRIME MINISTER: Yeah, so it's one of those things you know, defence procurements and programs happen over a long period of time, but at the same time, you don't get there unless you start now. And so, the beginning of the pathway is immediate. And so, yes, at one level, the day in which we are commissioning that first nuclear powered submarine is a long way off, but the decision making that we need to go through and the steps that we need to start taking feel immediate to me. And so there really is no time to waste, I mean, I don't seek to be here to be partisan, but we do come off what I think is close to a lost decade in terms of where we've gone with the success of a Collins in terms of our submarine capability. We do face the real potential of a capability gap. We're thinking a lot about how we fill that, which is another story, but one thing that's really clear is we've got no time to waste and we need to be on this thing straight away.

So there are a few points to make. I mean, I think there needs to be, I think it's really important that strategists in the room continue to promote the strategic discussion around the importance of what we need our Defence Force to do. I kind of described it in terms of impactful prediction, but I think, you know, we need all our best thinkers out there giving their contribution to this, pulling it apart, seeing how submarines can play their part. Because it really matters that we have a detailed, thoughtful, textured, granular conversation about all of that. We will need to start developing the capacity to build nuclear submarines (inaudible) we will need to start the process of doing that right now. And so, a whole lot of work needs to be done by defence industry in terms of working out what capabilities exist in Australia, how much of this we can do here. This is partly, I mean, there is a dividend here as I said earlier about jobs in Australia, that's great, that is great. But the reason why we will need to develop this capacity in Australia is because I think part of the attraction of AUKUS from the perspective of the United States and the United Kingdom, is that the net industrial base of all three countries grows by virtue of the capacity being developed in Australia. And so, you know, from a strategic point of view it matters that the capacity gets developed, and in that sense, you know, I think we really do need to think about how we can, you know, what home-grown abilities we've got here, capabilities we've got here, and how we can augment more.

We need to be thinking about the human equation here. That’s the human equation in terms of submariners, but it’s the human equation in terms of those who would participate in the build of the submarine and again, we need people thinking about all of that. The final point I’ll make is, we are walking down the nuclear pathway (inaudible) pretty easily, but the scale of what that means in terms of the national endeavour, is huge. It's meaning, for example, that a building, I guess in Adelaide that might have housed some components of the Attack-class submarine would have been rated to withstand a one-in-500 year seismic event in the context of a nuclear mindset, we need to be rating that building to a one-in-10 thousand year seismic event. Everything needs to be harder. Everything needs to be more robust. This is an example of the degree to which we need to go to make sure that we are able to be good nuclear stewards, from cradle to grave. And cradle this sense means the receiving of the reactor, not the building of it, but right through the process we need to be thinking about how we regulate and how we handle the nuclear material. We need to be doing that from the perspective of both the United States and the United Kingdom because they are not going to walk down this path unless they have a complete sense of confidence about our ability to be good nuclear stewards. We won't be able to do it from the perspective of the International Atomic Energy Agency, who will not give us the tick unless they have a sense of confidence that we will good nuclear stewards, and their tick will be the social licence for us walking down this path. So there is just a power work to be done in respect of all of that and again, I think people in this room have an enormous contribution to make there.

FITZGERALD: Thank you Deputy Prime Minister. So just picking up on one of your points there about – without rehashing the history – I recall at the previous conference you talked about how hard it was for you to come out and criticise the process that was being done through the Coalition (inaudible). But more recently since coming to government, you’ve been highlighting the quality of the defence spend and (inaudible) small quote here that “under your government there would be a prudent management of the Defence budget, because the Albanese Government understands this is the way we get submarines in the water faster”. I wondered if you could share with the delegates what the government is doing, has done and will be doing in the future, to ensure the success of programs such as the acquisition of nuclear powered submarines. (Inaudible) Collins, which is a very important part of our capability in the short term and medium term, and will (inaudible) undergo a very large and complex program (inaudible).

DEPUTY PRIME MINISTER: Yeah, so there are two questions there I guess. One is, you know, how are we going to manage budgets and programs, and then Collins. In terms of the first one, the defence budget is projected to grow during the forward estimates and across the medium term in the next 10 years. Beyond that, I think it's worth making the observation that in a rational world, defence spending is a function of strategic threat and strategic complexity. We live in a very precarious, complex world, and we are rational people. So I hope that says something about where our thinking is in relation to what we need to do in respect of Defence. But if that is the world in which we're living and we are imagining, defence spending is going to go north, then the only way we build, I think the license for that within the broader budgetary processes of government, but to be honest the license for that within the public, is if there is a quality in the spend. It’s not good enough to just put a ring around Defence, exempt it from normal budgetary processes, say that it will grow and kind of, you know, set and forget. It actually matters that we are demonstrating to the Australian public that there is a quality associated spend in Defence and that is the basis upon which we can legitimately go forward and say we, Defence will need to be potentially our highest spend, given the threats that we face and the capabilities that we therefore need to build and acquire. So we are really focused on, not just the amount that we're spending on Defence, but the quality of that spend. And, there I guess it goes back to basics a little bit - having clear, objective metrics by which projects are placed on the projects of concern, projects of interest list; making sure that when a project does find itself in that category it’s inevitably able, given the complexity of defence projects; that there are monthly reports coming to ministers, so there is ministerial involvement and active management of the way in which we are maintaining our programs. And that we are doing all of this off a clear, strategic base of thinking, which is really what the Defence Strategic Review is trying to do, so that as little of this as possible, is infected by politics. Because, you know, I'm a politician with everything that implies, and I'm not (inaudible). But you know, I do think that so much of the way in which this has been managed previously has had a kind of, has been affected by electoral political considerations, in a way which has been unhelpful to the quality of the spend. I think if we're going to avoid that mistake going forward, then there needs to be a really clear strategic rationale for why we're taking , why we're pursuing any given program, why we're taking what steps we're taking - that that's being articulated and explained to the Australian people so that actually the politics aligns with the fulfilment of that and projects are then pursued against that strategic framework. So we're really trying to make that happen. I think that happens, in being done in a thoughtful way, that I do feel like Kim is the great defence minister of modern times, and if we do half as well and emulate the way in which Kim went about his business, then I feel we will be walking down that path in a successful way.

In terms of Collins, yeah, I guess going back to the previous question you asked, whichever way you cut it, Collins is going to be doing the bulk of their submarine task for many years to come. Life of Type Extension of Collins, which is really now the replacement all six Collins, are going to be really important. And so, a lot of what we're going to be about in the immediate term, in terms of the way in which we are doing our submarine capability, is through Collins. So I can’t kind of emphasise enough how important Collins is, and the emphasis we need to place upon that, and particularly the Life of Type Extensions.

Then one final piece amongst all of this is that, I mentioned earlier that to get to where we need to, in terms of nuclear powered submarine capability, there is a human dimension to this. We need to grow our submariners and providing opportunities for them on essentially US and UK boats is going to be really important. So we've already announced something in relation to that in respect of the UK, we hope to find opportunities in the US as well. But that, I mean that happens well before we’ve got our own nuclear submarine in the water, but we will be kind of walking down a path very soon of actually growing Australian submariners who are nuclear submarine capable.

FITZGERALD: (inaudible) just a final topic, (inaudible) capability, this is going to be around the acceptance or frankly the support, or at least begrudging acceptance from broader society other than the submarine group or submarine industry, or national security (inaudible). And there are two things we get out of this conference; one is we do group-led informed debate at the conference, and we make a little bit of money on the side to invest in our two key projects are aimed at that. Our undersea outreach program, and our national submarine museum, which are all about informing and engaging the broader community. How important do you feel it is that this happens, to gain that social licence to operate nuclear powered submarines. And do you have any advice for the delegates? One thing I asked in the opening is that people go forward from here and spread the word from this conference and from these mediums to a broader society to bring the rest of the nation on board, you know, given that you submariners have traditionally talked very much.

DEPUTY PRIME MINISTER: So, spread the word is right, you all need to become evangelists. You’ve got to preach the truth here. Because it is really important that people do understand what submarines do, and you know, I think the answer to your question is it's supremely important. I mean, submarines are pretty mysterious to be honest, for the broader public - what they do, why they matter, is not clear. And so I think, which is why I wanted to say what I did up front, which is what you've already done is so important in terms of promoting discussion around this capability and its place within the broader defence capabilities and the role it has building Australia's strategic space. You know, for me, I had the really good fortune of spending a night on HMAS Rankin off the coast of Fremantle. It was -  I had 24 hours, I was told I was sleeping in first class, which was just under the torpedoes, which is where you actually can stretch out your legs, I mean I was hanging off the end of the bunk, but at least I wasn't kind of curled up in a ball. It was, I mean, it was it was a fantastic experience. One of the things I discovered was that, there's psychological testing, which is done for submariners before they go down, I kind of thought that was about being able to cope with claustrophobia and not seeing sunlight. So the remarkable thing to me is, everyone was really nice, and it wasn't by accident. Everyone has been psychologically tested to be nice. And what I found incredible was that if you're cooped up in this vessel for a long period of time, when you got shore leave, everyone would have disappeared to the four corners of the earth and do their own thing. They don’t, they all hang out together. Everyone goes out, they all hang out together even on their breaks and I'd say “what's the best thing about being a submariner, working on a submarine?” and everyone gave the same answer - and it was astonishing - everyone said the best thing about working on a submarine is coming to work to be with your friends. Literally that's what everyone said, and I found myself thinking about this really kind of nice little community that was hanging out under the sea, and for weeks afterwards as I was like “I wonder where they are now, I wonder what they’re doing?”. So it was, to have that experience was unique for me. But I'm speaking to the commander of the submarine, and it was really the conversation for me where the penny dropped about why submarines do matter. The point he made to me was that submarines, by virtue of their stealth and the unique capabilities, unlike any other platform we have platform we have, can place the single biggest question mark in our adversaries mind. That's in a sense what we're buying with the capability. We are buying a large question mark in our adversaries mind. More than anything else that we have. And if our strategic setting going forward needs to be more like a porcupine, then in fact question marks in our adversaries mind are going to be really, really important and the size of them is going to matter. That's what submarines do, and I think being able to explain that to the Australian public so that people can understand why we are spending an enormous amount of money, on a comparatively small number of platforms. If it stops being about the platform, but it starts being about the question mark and the pause for thought we give in respect of any adversary, suddenly, every cent associated with this is worth it and I think being able to give that message to Australian people is profoundly important.

FITZGERALD: And just to wrap up I might see if Steve has any questions (inaudible)?

COMMODORE STEVE DAVIES (Rtd), MASTER OF CEREMONIES: Yeah, we have been gathering questions and people have been voting on them, and you wouldn't be surprised given the large industry audience here that people want to know what industry enablers are needed now, to facilitate the introduction of nuclear submarines?

DEPUTY PRIME MINISTER: Before we say nuclear powered submarines, submarines are hugely complex machines, so the process that we have gone through as a country in terms of - as a defence industrial base, and working out what capabilities we have to build the Attack-class, as we were going to, is not wasted effort. That actually, that is still highly relevant to understand what capabilities we've got and what we can bring to bear in this. So I think before we talk about nuclear power, we are planning to build submarines in Australia still, and we're planning to walk down that path pretty soon, and pretty quickly. And so all the work that we had previously done in relation to getting people prepared to participate in Attack applies here. I think there is - there are all the issues that I described in relation to nuclear stewardship, which we need to be thinking through, and it's not - it's kind of, I almost feel, above my paygrade, but it is just the concept that everything is more far more robust. And so we need to be thinking about that.

And the final point I’ll make is, a lot of focus has been put on South Australia, that's appropriate, that is where we will develop the capability to build submarines. WA is going to matter as well, it's really going to matter. WA is obviously the home to our submarine fleet now, will continue to be that going forward and has I think, a very particular role play in the next few years. So we need to be thinking about our infrastructure there. And then the final point I’d make is that to do all of this actually requires a defence industrial base across the country, so, this is going to require a significant national (inaudible).

FITZGERALD: Thank you, Minister. We know, we're moving on, you’ve got a lot of things on. So I'd like to thank you very much for your contribution to our conference today, and for opening it.


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