Interview with Andrew Clennell, Sky News

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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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14 March 2023

ANDREW CLENNELL, HOST: Well, let's go live to Canberra now and bring in the Defence Minister and Acting Prime Minister while Anthony Albanese is overseas, Richard Marles. Mr Marles, thank you so much for joining us. I think I'll just get to the nub of it here and ask, are we in a Cold War and an arms race with our largest trading partner?

RICHARD MARLES, ACTING PRIME MINISTER: No, I wouldn't characterise it as that at all. And as we've said repeatedly, we value a productive relationship with China and we are working very hard to stabilise our relationship with China and we very much hope that we can navigate a future in the region and the world which is which is peaceful. So I wouldn't characterise it like that at all. But we are in a strategically complex era. We're in an era where there is significant strategic threat and we need to be making sure that we are preparing for our own future and handing on to our children and our grandchildren a country which is as self-reliant as possible in the context of that future. And that means we need to have an ability to project. And having a highly capable long range submarine, which needs to be a nuclear powered submarine, is at the heart of that.

CLENNELL: But this is a deterrent to the Chinese government, isn't it?

MARLES: Well, what I think this is Australia contributing to regional security. As I've said a number of times, the defence of Australia doesn't mean much unless you have the security of the region. And it's also an Australian contribution to the underpinning the global rules-based order, which is so fundamental to us as a trading island nation, where so much of our national prosperity is based on trade and in turn, therefore, based on the sea lanes, which is the means by which that trade occurs. And it is really important that in that context, we have an ability to project, that we do have an ability to hold any potential adversary at risk further from our shores. But all of that, I think, is part of contributing to the collective security of our region and the underpinning of the rules-based order upon which we rely.

CLENNELL: So the US is going to sell us three Virginia class subs with the option of another two. For how long do you anticipate these subs would have been in the water? Will any be new? Will they have been in the water for ten years, 20 years?

MARLES: So some will be in service, some new, is the answer to that question –

CLENNELL: How long in service?

MARLES: For those that are in service, the first will be one that is in service, it will come to us with a good two decades of life left in it. So in that sense if we are acquiring it, which is our intent in the early 2030s, that boat would have a life which would extend into the early to mid-2050s. And in a sense that's the shortest-lived of the boats that we would acquire.

CLENNELL: And what will each of these Virginia class submarines roughly cost? I know we've got the full cost out of you in terms of a GDP figure, but these individual Virginia class submarines, what's the cost of them to Australia?

MARLES: Yeah, we're not breaking out an individual cost, Andrew, because it ends up being a pretty arbitrary task when you consider what forms part of the acquisition, what forms part of the sustainment. We talked about a contribution, for example, to the industrial base in America. When you go and buy a car, you're paying for the factory and so you can argue that the cost that we're spending on the industrial base forms part of the purchase price of the submarines. At the end of the day, what matters here and what we're doing is providing a total cost for the capability and that's something different to what's happened in the past where governments have tended to provide a number in respect of acquisition alone and the number in relation to sustainment tends to be dragged out of them. What we're providing is the total cost for the program for acquiring the capability, and what that will mean is $9 billion over the forward estimates. Over the ten years we expect to pay between $50 billion and $58 billion. And over the life of this program there'll be a spend of 0.15% of GDP. That can be seen in the context of defence spend right now, which is 2% of GDP and growing to 2.2% of GDP. So that gives you a sense of where this fits into the total defence spend. And when you consider what this does in terms of completely transforming the capability of the Australian Defence Force, greatly adding to the potency of the Australian Defence Force, of all the spend that we are doing the 0.15 per cent on this will be the best value for money spend that we will make in terms of our Defence Force.

CLENNELL: And what's the situation with contracts that bind this?

MARLES: Well, this is an arrangement between three countries and in a sense there will be a legal underpinning to it. But I mean, this goes well beyond that. This forms part of a deep relationship between three countries which is the basis upon which all of us are moving forward and we've all thrown ourselves into this. For each of us, it is central to what we're doing that the other can't fail and so this goes well beyond a legal contract. This forms part of the heart of a key part of the relationship between two of our most important friends and allies.

CLENNELL: Doesn't this announcement make it far more likely that should the US step in to defend Taiwan, Australia would join that effort?

MARLES: I'm not going to speculate about anything in relation to future contingencies around Taiwan and you wouldn't expect me to, other than to say that all of those questions in the future will be determined on the basis of what's happening in the future. This stands separate to that. This is about Australia having a capability, which is a transformational capability for our country, which, as I've stated, is really the strategic intent of which is about providing support to the collective security of our region and underpinning the global rules-based order and the regional rules-based order upon which we rely.

CLENNELL: Now, I'm seeing reports this morning that our fleet will be interoperable with the British and American fleets, but there's one big difference that stands out, isn't it? They will have nuclear warheads and despite us, with the Virginia class having the capacity to, we never will. Do you think that's a weakness in the arrangement?

MARLES: I don't think it's a weakness in the arrangement. It's not what these submarines do. We've never talked about having a ballistic missile submarine which would form part of a strategic deterrent. That's a different class of submarine that both America and Britain operate. In terms of the submarines that we are seeking to operate, they will be very interoperable with both the British and American submarines, and we've made very clear from the get-go and was understood very much by our partners in the UK and the US that they would always be conventionally armed and only conventionally armed.

CLENNELL: How are we going to pay for this? Are the stage three tax cuts at risk at all? Is it a matter of borrowing more cuts to other areas of the Defence Budget? Where are you casting your eye as you look to fund this arrangement?

MARLES: Well, I'm not going to go into a broader budgetary discussion. Obviously all of that will happen in the context of the lead up to this Budget and budgets beyond this, other than to say, both myself, the Treasurer, the Prime Minister have talked about the fact that we expect our defence spend to grow and that will be an increasing and ongoing pressure on the Budget. And we all understand that. What we have said is that in the context of a growing defence budget, what really matters is that Defence is not immune from the normal fiscal and budgetary rules that Treasury and Finance should have and needs to have an expectation of value for money in the defence spend. And in that sense we have made an effort to open defence spending up to scrutiny. And the fact that we are able to say that over the forward estimates within the existing funding envelope for Defence there will be a neutral outcome. I think is a really big statement around the affordability of this and is a demonstration to the rest of government that Defence is doing everything within its power to make sure that there is value for money in the spend that it undertakes. So I'm confident that we can get there. I'm not diminishing the fact that this is a significant spend, it's obviously a very significant spend. But ultimately it's value for money, it's investment in our security, it will ultimately be an investment in our broader economy, but fundamentally, this is an investment we can't afford not to make.

CLENNELL: Will there be an east coast subs base as part of this plan?

MARLES: Well, that's not part of the announcement today, and I know there has been speculation about all of this. What the former Government announced, what was a desire to have an east coast base on the basis of having greater breadth in terms of where we can operate our submarines from, but also having a base on the east coast enabled a greater attraction of workforce to work on the submarines. We absolutely accept the underpinning of that logic and so we see that. But even as the former Government was talking about this, they were not preparing for an east coast base for a long time in the future, and none of that changes now. So there'll be an east coast base one day, but this is not- exactly where that will be and all of that is not a decision for right now.

CLENNELL: Do you see a change of government in the UK or US being a danger to this deal?

MARLES: No, I don't, but it's a reasonable question in the context that this is such a huge program, which is going to go over the course of decades, but it's really a program that ultimately requires bipartisan support in the UK, in the US and here in Australia. And what I can say to you is that it does in all three countries. I mean, there is bipartisan support for this arrangement here in Australia, most certainly is in the UK. And I was able to meet with the Shadow Defence Secretary in the UK when I was there six weeks ago. And as we have been working with America, the American- the Biden Administration across the aisle in the Congress – because a number of these elements will require congressional approval – what's clear is that there is very much support across the political spectrum in the United States as well for the Alliance with Australia, but for this particular arrangement. So it matters that this enjoys broad political support in all three countries, and it does.

CLENNELL: Now, you spoke about the need this morning for a nuclear waste facility in Australia. I'd imagine that would be in either South Australia or Western Australia. Would you agree with that? And when would it be up and running? Or have to be up and running?

MARLES: Yeah, I don't want to leap into where this might be, but we will need to build the facility, and we've made clear that will happen on Defence land, be it current Defence land or future Defence land. We will not need to dispose of a reactor until the 2050s, and that would be the first of the reactors from the first of the Virginia class submarines that we will start operating in the early 2030s. As I said, they will have a life of a couple of decades. So that places us in the mid-2050s. We will, within the year, announce a process by which we identify that facility and what the facility will look like. So that's to say we won't identify the facility in twelve months’ time, but we will set up a process within the next twelve months for how that will be identified. But we've got time. We've got time to get this right, we've got time to identify the facility, but it is a very important step in this process.

CLENNELL: All right. And finally, Acting PM, thanks for your time this afternoon. As certain as night follows day, we can expect Paul Keating to criticise this arrangement at the National Press Club, this address he's doing tomorrow. What do you have to say to his criticisms of our defence and foreign policy approach?

MARLES: Well, let's see what Paul Keating has to say. I'm not going to react before he said it. But what we say to what we're doing here is the announcement that we've made today. I mean, this is fundamentally important in terms of Australia's future self-reliance. This is fundamentally important to making sure that we are handing to our kids and our grandkids a country that can look after itself in what is a very uncertain future. And this is a transformational capability which comes at a significant cost, but one that we can manage, but puts us in a completely different position to maintain our way of life into the future. And that is ultimately the number one obligation that we have as a government.

CLENNELL: Acting Prime Minister Richard Marles, thanks for your time this afternoon.

MARLES: Thanks, Andrew.


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