Press conference - Parliament House, Canberra

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The Hon Richard Marles MP

Deputy Prime Minister

Minister for Defence

Media contact

dpm.media@defence.gov.au

02 6277 7800


The Hon Pat Conroy MP

Minister for Defence Industry

Minister for International Development and the Pacific

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media@defence.gov.au

(02) 6277 7840

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minister.conroy@dfat.gov.au

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14 March 2023

RICHARD MARLES, ACTING PRIME MINISTER: Welcome, everyone. The announcement that we have seen this morning from the Point Loma Naval Base in San Diego represents one of the biggest decisions that an Australian government has ever made. This is the biggest defence procurement, in fact, it's the biggest procurement in Australia's history. Australia will now be just the seventh country to operate a nuclear-powered submarine. And this represents the biggest leap in our military capability since the end of the Second World War; arguably it's the biggest leap in our military capability in our history. 

We often describe ourselves as living in the most complex strategic landscape since the end of the Second World War. We say this because we've watched the global rules-based order being placed under enormous pressure in Eastern Europe, but also in the Indo-Pacific. And we are witnessing the biggest conventional military build-up that we have seen since the end of the Second World War. And it's happening within our region. And it is not Australia which is doing that. And we need to respond to this. A failure to do so would see us be condemned by history. 

As a trading island nation, so much harm can be done to us before ever setting foot upon our shores. And so it's fundamentally important for our nation that we have the ability to project, and to project with impact. And a long-range nuclear-powered capable submarine will be at the heart of Australia's future projection. It will enable us to hold adversaries at risk further from our shores. But the true intent of this submarine, of this capability, is to provide for the peace and stability of our region. Because when you look at our geography, the defence of Australia is not relevant unless there is security within our region. So we want everyone to understand: the Australian people, but our friends and neighbours, that at the heart of our strategic intent is to make our contribution to the collective security of our region, and to the maintenance of the global rules-based order, which is so fundamental to Australia's future. And it's for that reason that we are acquiring a nuclear-powered submarine.

In making this acquisition it will enable us to hand on to our children, and to our grandchildren, a country which is much more self-reliant, and much more able to take care of ourselves in a very difficult future ahead. Now the cost is significant. But I would be quick to add that the sort of numbers that you have seen, a capability of government out to the mid-2050s – and you can look at a whole lot of abilities of Government, beyond defence, which if you cost it out to the mid-2050s, would have similarly large numbers. But this is a very significant cost. The best estimate of the cost - and to be honest, the most transparent and honest estimate of this cost - is 0.15% of GDP through the life of the program. And that needs to be seen against a Defence budget which is currently running at 2% of GDP and is expected to grow to 2.2% of GDP. So for that 0.15% we completely transform the capability of the Australian Defence Force and the potency of the Australian Defence Force. This is an investment in our nation's security. It is an investment in our nation's economy. And it is an investment that we cannot afford not to make.

A precondition of the whole program with AUKUS is making sure that everything we are doing is compliant with our non-proliferation treaty obligations, and we are really confident that in this arrangement we are establishing the very highest bar in relation to our NPT obligations and we have been working very closely with the International Atomic Energy Agency in respect of this. In this respect, a sealed nuclear reactor is our friend because by virtue of having a sealed reactor we can provide assurance in respect of every piece of nuclear material through the lifecycle of the nuclear material. We are making a commitment that we will dispose of the nuclear reactor. That is a significant commitment to make. This is going to require a facility to be built in order to do that disposal. Obviously, that facility will be remote from populations and today we are announcing that that facility will be on Defence land, current or future. Now, to be clear, the first of the naval reactors that we will be disposing of will not happen until the 2050s. But within the year, we will announce a process by which this facility will be identified.

We are also a proud signatory to the Treaty of Rarotonga. And that is a treaty which commits Australia to not operate nuclear weapons from our territory. Now, it's been said a number of times today that this is a conventionally-armed, nuclear-powered submarine. So Australia has no intention of operating nuclear weapons from our soil. But we reiterate and reaffirm today that in every part of this arrangement, Australia will be maintaining its obligations under the Treaty of Rarotonga and that includes through the US and UK rotation of HMAS Stirling from the late 2020s.

There has been a huge diplomatic effort which has underpinned the announcement today, and that's been going on for months. But it's particularly been going on over the last week. Between myself, the Minister for the Pacific in this context, the Foreign Minister, and indeed the Prime Minister; we've made more than 60 calls to regional and world leaders within the Pacific, within ASEAN, within our Five Eyes partners. And I'll let those countries speak for themselves, but I am very grateful for the response that we have received.

I particularly in this context want to mention France given all that occurred eight months ago. I spoke with my French counterpart, Sébastien Lecornu last Tuesday, took him through this announcement in detail. So there are no surprises. And I'm really grateful to Sébastien for the hearing that he gave me. One of the things I want to make clear is AUKUS is not a new alliance. AUKUS is a technology sharing arrangement between Australia, the US and the UK. In an operational sense, we are building our relationship with France with a much greater tempo of military exercises, with much greater access to our bases on the Australian continent, but also French bases in the Pacific and indeed, in the Indian Ocean.

Ours is a relationship which is growing in strength. And I'm really pleased about my personal relationship with Sébastien Lecornu, which for me typifies the warmth of the relationship that we have with France. We're in a good place with France. And that matters, because really, France is effectively our closest neighbour.

Finally, if you'll indulge me I just want to say thank you to the hundreds of people who have put in a power of work to get to this moment. To Admiral Mead and to Taskforce and all those who are working within the Taskforce who have put in countless hours over the last 18 months and particularly in recent times.

To those in the Department of Defence, those in the Australian Defence Force, in Foreign Affairs, in Treasury, in Finance, in PM&C. And also, those in our offices here in this building – my office, Pat's office, the Minister for Foreign Affairs’ Office; the offices of the Treasurer and the Finance Minister. And, of course, the PMO. A lot of midnight oil has been burnt over the course of the last few weeks and I am really humbled by the effort that has been put into bringing this to this moment today.

PAT CONROY, MINISTER FOR DEFENCE INDUSTRY & THE PACIFIC: Thank you Deputy Prime Minister. And if I could just emphasise a couple of points from the Defence industry point of view. As the Prime Minister said this morning, this is the greatest industrial undertaking the nation has ever attempted. The greatest industrial undertaking the nation has ever attempted. Surpasses the Snowy Mountains scheme and is on par with the establishment of the car industry.

By phase three of the plan, when we're producing SSN-AUKUS, we will be part of the most technologically advanced activity in the world, the most advanced in the world. It’ll create around 20,000 jobs, including a direct industrial workforce of up to 8,500 building and sustaining the submarines. 4,000 to 5,500 workers will be building SSN-AUKUS in the South Australian shipyard. And this is around double the Attack yard shipyard jobs; around double the Attack class shipyard jobs. And these figures do not include the supply chain jobs of tier two and three suppliers who inevitably will win work on this project.

And one of my messages to Australian industry and workers is that this work starts right now. Starts right now. $6 billion will be spent over the next four years investing in the Australian industry and workforce. For example, infrastructure upgrades, skills development, training and apprenticeships. Capacity building of Australian suppliers will also be lifted so that they can not just supply us, but supply our AUKUS partners.

The development of the Submarine Construction Yard commences this year. We'll be expanding the shipbuilding workforce with more apprentices, undergraduates and graduates coming on in the next few months. We'll be establishing with the South Australian Government a skills academy to deliver the training. And we'll be training hundreds of apprentices each year.

An apprentice who starts on this project today could work their entire career building these submarines for Australia, which is a tremendous opportunity. We'll also be upskilling workers in adjacent industries. Furthermore, hundreds if not thousands of Australian workers will be working overseas in UK and US shipyards, helping them build their submarines and bring back valuable skills and experience to help with our build. We'll also be working with our AUKUS partners to identify specific opportunities for Australian industry to participate in the nuclear submarine supply chain for our partners. This will help ease the supply chain constraints the United Kingdom and the United States is currently experiencing, it will leverage the considerable expertise already present in Australian industry and it will boost our capacity ahead of the commencement of the Australian build program.

Opportunities identified where we could be competitive include around valves, pumps, batteries, and pipe fitting – these are just some of the opportunities that we'll be exploring. We'll also be pursuing opportunities for the construction yards who manufacture components for the United States and UK production lines, helping us build our experience and certify the facilities and the workforce.

And over the course of the program it’s estimated that we'll spend around $30 billion dollars just uplifting the skills and capacity of the Australian industry and the Australian workforce. Importantly, the acquisition strategy for this entire project has been driven by learning the lessons from past projects. And one of the most important features is that the first Australian-built submarine will be delivered around half a decade after the first of type, that will be produced in a UK submarine. We are not building the first of type of this class. There'll be a number of UK submarines that will have the prototyping being associated with it. So we have learned the lessons from previous Defence procurement projects.

But in summary, this is a tremendous opportunity for Australian industry in Australian workers. Just as the Collins build modernised Australian manufacturing in the 80s and 90, this will expose Australian industry to some of the most advanced technologies and capabilities in the world and will create around 20,000 well paid, secure jobs for Australians. So this is a huge nation-building achievement.

VICE ADMIRAL JONATHAN MEAD, CHIEF OF THE NUCLEAR POWERED SUBMARINE TASKFORCE: Deputy Prime Minister, can I start by saying what a privilege it has been to work in this team and I've been honoured to work with extraordinary people over the past 18 months to develop this Optimal Pathway. When we first started, it was generally a blank canvas. But we stacked hands pretty quickly with our US and UK partners to identify what were the key areas we needed to address, the strategic elements, trilateral contributions, the capability – we needed to identify an enduring capability solution. But you've been very direct with me, Deputy Prime Minister, that we need to make sure there was no capability gap throughout. We needed to make sure that we could adhere to the highest standards of non-proliferation. So working with the IEA, the industrial base, workforce training and education pathways, stewardship, and security really much dominated the work over the past 18 months.

I would particularly call out the support from US and UK colleagues that have worked tirelessly with us. They have shown us facilities that no Australian has ever been exposed to before. They have flown to our country – they have had a very deep and immersive look at Western Australia and South Australian facilities. We've gone to all their facilities in Barrow, Derby Rolls-Royce, in the shipyards and in the UK as well and we've sent other people to Guam and Pearl Harbor for part of accumulating this evidence pack so that the three leaders could go forward and announce today that Optimal Pathway, a Pathway that delivers an enduring world class nuclear-powered capable submarine. A Pathway that means that there will be no capability gap, and a pathway that also addresses our exemplary non-proliferation record.

MARLES: So we'll go through the questions. We want this to be fulsome press conference. I just want to say a little disclaimer upfront – this is a vast announcement that has been made today. I don't know the answers to all the questions that you're going to ask. But I'm pretty confident that between the three of us, we will have the answers to most of them. If there are any that we don't, we will endeavour to get back to you as quickly as possible.

REPORTER: Is a high-level nuclear waste dump the price that South Australia will have to pay for the jobs that go to the state?

MARLES: Well, as I indicated there will be a process that we will determine within the next 12 months for how the site will be identified. You've made a leap there, which we’re not going to make for some time. It will be a while before a site is ultimately identified. But we will within the next 12 months establish a process for how we walk down that path.

REPORTER: Minister, the $9 billion the Government is spending on AUKUS over the Forwards has a neutral impact on the Budget – $6 billion because of what was allocated to the Attack class, but $3 billion is coming from the Integrated Investment Program, can you give more details about where that $3 billion is coming from? And if not today, when?

MARLES: So I won't give you the detail today, except you're right to identify the Integrated Investment Program and obviously the Strategic Review has had a good look at all of that. All of that will become plain in time for the Budget.

REPORTER: Why not now, though? You must have an idea where those cuts are going to be. In the interests of transparency, people want to judge what the opportunity cost of the nuclear submarines are, unless you're suggesting that it's cuts first and work it out later?

MARLES: Well, no.

REPORTER: Where are the cuts coming?

MARLES: You will get all of that information before the Budget, which is measured in just a couple of months, so you can judge us at that point.

REPORTER: You said before, this program is very costly and yet there's a 0.15 per cent increase as a percentage of GDP. That seems rather modest, especially when you consider that experts like Marcus Hellyer and Dennis Richardson were predicting that defence spending would have to be at least 2.5 per cent of GDP, if not more. How do you tally the giant cost of it and it being relatively modest?

MARLES: Well, I mean, it's a really good question. I think 0.15 per cent of GDP is the best way to describe this and I think when you consider what we are doing to transform the capability and potency of the Australian Defence Force, it is modest. I think that's right. I think this is –

REPORTER: I'm not endorsing it. I'm just questioning why it should be so modest when others say it should be higher.

MARLES: Yeah, no – I'm endorsing the idea that it's modest. When you think about the potency and capability that it comes from this, this is as good a value-for-money spend in defence that you will get. We've got a long way to go in terms of how we structure the ADF, and in about a month's time, there will be the second of the big announcements, which is when we release the public version of the Defence Strategic Review. And there will be some very big decisions in relation to that as well. But I think it is important to understand that amidst all the figures that have been thrown around in respect of this program - and it's the point I was making earlier - you can take any ability of government and forecast it out to the middle of the 2050s and you will get a large number. And let's be clear, there's something of a guesstimate whenever one does that because inherent in that number is whatever the inflation race is in 2050, and no-one knows that. But when you boil it all down what we're talking about is 0.15 per cent in the context of a Defence budget that is right now at 2.0 per cent and growing to 2.2 per cent. And for that 0.15 per cent we transform the potency of our Defence Force, which is why we must do this.

REPORTER: Even taking difficulties of forecasting into account, do you confirm the $268 billion to $368 billion figure? And can you give Australians an idea as to whether sacrifices will be required in other parts of the Budget? The Opposition Leader is already talking about possible cuts to the NDIS. Are these the conversations we’re going to have to have?

MARLES: In terms of the first part of the question, I'll let you all do the maths, but I’ve kind of made the point that whatever maths you end up doing will have a lot of assumptions in it which are very difficult to verify at this moment. 0.15 per cent of GDP is the clearest and most honest way to describe the costs through the life of the program. I'm not about to turn it this into a press conference about what the Budget looks like. Obviously, the Treasurer is convening the ERC right now in full swing and there's a whole lot of conversations going on in relation to that. The important point to make about the cost in respect of the Forward Estimates is that Defence is covering it. So Defence is cost neutral with this over the Forward Estimates. Now I think the idea that anyone would have suggested that was possible when we came to government, would have been described as being crazy and yet we have got to a point where it will be neutral over that time.

CONROY: Just to supplement, that 0.15 per cent to be clear, includes costings that have never been provided for other defence projects in this country. It includes developing and upskilling workforce and industry, supporting the supply chain, the infrastructure in South Australia and Western Australia, the build and delivery of the program, the operations, importantly, sustainment of the platforms and weapons and contingency. Unlike the Attack class which didn't include the costs of the workforce, the facilities, contingency, weapons, sustainment, or the West Coast base infrastructure. So as the DPM has said, we are being incredibly transparent with the public about the costs of this national undertaking.

REPORTER: China has accused Australia of ‘planting a time bomb’ with this AUKUS announcement. Was Beijing on the list of the phone calls you made?

MARLES: We've offered a briefing to China.

REPORTER: On the Collins class, will all six of those submarines go through the Life-of-Type Extension? Can you provide that guarantee?

MARLES: Well, a Life-of-Type Extension is provided for in respect of all six, and obviously the full-cycle docking program continues. What we are doing now with the early accusation of the Virginias and in the event that we are able to stand up the capability to build our own submarines in the early 2040s, as planned, the honest answer to that question is that will give future governments options in terms of precise mix of the submarine fleet.

REPORTER: Just back on the waste issue, we’ve been squabbling for 30 years over where to bury low-level waste and it's still yet to be resolved. You've got less time than that to establish a high-level facility plus reprocessing. You've said Defence land. Would it not be easy to just make a decision to plonk it in Woomera, which is Defence land and already has waste up there? And if I could, a second, your conversation with the French Defence Minister, in November last year, Emmanuel Macron at APEC in Thailand was criticising the AUKUS deal saying it will risk a nuclear conflict with China and cost Australian sovereignty over submarine fleet. Are the French no longer of that view?

MARLES: Let me answer the second first. I'm not about to speak for France –

REPORTER: The Defence Minister you spoke to, was he (inaudible)?

MARLES: Again, I'm not going to speak for France and they're very obviously capable of speaking for themselves. I was very grateful for the conversation. What I would say is that we feel our relationship with France is in a good place. We've put in an enormous amount of effort, as have they, to rebuild the relationship from where it was 18 months ago. France matters because they are effectively our closest neighbour. The closest overseas population to where we're sitting today is in France, it's in Noumea. And France see us as a critical partner as well. We both want the relationship to be going in the right direction and I genuinely believe it is, but ultimately the French will react as they do to this, and I'll let them speak for themselves.

In respect of the first question, first thing, we are talking about more than 30 years from now is when the first of the reactors would need to be disposed of. So that is the timeframe. We will, in the course of the next year, announce a process by which that site will be identified. We're not about to identify right now. And there is plenty of time in which to identify. The point we are making though, and this is different from what's happened with the low-level nuclear waste site, is we are committing to the fact that it will happen on Defence land, be it current Defence land or future Defence land.

REPORTER: This timeline will span several US Presidential administrations. Are you concerned that a future US president will tear it up?

MARLES: Well, I'm not, is the answer to your question. The US alliance has thrived under successive administrations and governments in Australia since the Second World War. And that includes over the last ten years. So I'm confident that this will be an enduring arrangement with the United States. I'm confident of that based on past record. I'm also confident about it because, right now, elements of this arrangement will require Congressional approval. Our American counterparts are busily working with members of the Congress in respect of it, in the House and the Senate. And that's across the political spectrum, and across the political spectrum there is complete support for the relationship with Australia and the AUKUS arrangements. So we enter this with a high degree of confidence.

REPORTER: (inaudible)

MARLES: Can I just answer the question, the answer to your question is Defence land.

REPORTER: But you said future Defence land, you could acquire Kimba as the Defence location?

MARLES: It’s Defence land, is the answer.

REPORTER: You made it very clear in the literature this morning that the stationed submarines in Western Australia will not constitute a US base. However, if there are up to four submarines out there, helping to train Australian sailors, they could be called on at any time to provide support in the Pacific, or in Asia for the US. In what way is that not a base?

MARLES: Well, it's a forward rotation. So they're not going to be based there. But you know, right now, we have a forward rotation of Marines – US Marines – in Darwin. So the same point can be made in respect of that presence. And we have an ongoing use of the continent in various ways by the United States, and not just by the United States – for example, Singapore probably uses our continent more than any country in terms of its military operations. But, we made clear, and I made clear in my Sovereignty Statement to the Parliament a few weeks ago that it has been a bi-partisan position of governments in this country and remains the position of the Albanese Government, that there won't be foreign bases in Australia and this will not be a foreign base. It's a forward rotation.

REPORTER: Is it possible that we'll be maintaining and operating three classes of submarines? That is the Virginia, the Collins and the AUKUS submarines. And if so, is there any concern – and can I ask Admiral Mead this as well, is there any concern in Defence about the prospect of operating three different submarines?

MARLES: So, and I'll hand over to Admiral Mead, we obviously will inherently be operating two as a result of this announcement. The preference is to operate as few classes as possible. This is the step that we have needed to take in order to close the capability gap. We can't escape from the fact that over the last decade, seeing our country go in and out of the deal with Japan, and in and out of a deal with France, has meant that we lost a decade there. And the alternative to doing this is to have a capability gap – or probably the alternative is to be solely relying on a Life-of-Type Extension of Collins, which is an answer but through the 2030s, will increasingly become not a great answer.

In terms of operating three, that really is going to be a decision for a future government. There wouldn't be much of an overlap, but it's going to be a question of the precise year in which you would retire the last Collins versus the precise year in which you would introduce the first SSN-AUKUS. They will ultimately be decisions for future governments. But we are confident that we can manage having the two submarines in the fleet, and there will be a considerable degree of commonality between the Virginias and the SSN-AUKUS, which will mean that the difference is not as large as it looks. Admiral Mead?

MEAD: I totally agree with what the Deputy Prime Minister said. So we currently have with our Collins class submarines, a US combat system and a US torpedo. I have submariners working for me who have just been part of a Virginia class program at sea for over 12 months. So the way that we wanted to construct this Optimal Pathway is retaining that type of lineage and DNA that we have with Collins, and therefore, the Virginia. And essentially you could put Australian submariners on board a Virginia now, and everything forward of the boats our submariners would be very familiar with. And once we work with the submarines coming to Western Australia and then develop our own capabilities on the Virginias, then the move to SSN-AUKUS, which will have incredible commonality with propulsion systems, platforms, weapons, combat systems and sensors, once again, by the time we get SSN-AUKUS, the cadre of our submarine force, but not just them, the industrial base that has to support and the scientists that has to support Virginia will be able to move – I won't say seamlessly, because there's no such thing as a seamless transition, but will be able to move at low risk to SSN-AUKUS.

CONROY: Can I just add, we've dealt with the crossovers before. There was a crossover between the Oberon class and the Collins class and there's more commonality between these two submarines than there was between those two.

REPORTER: When did buying Virginia class subs emerge? Was it in recent months or pre-election?

MARLES: It's not pre-election.

REPORTER: Can you expand on that and can we ask the Admiral the same question?

MARLES: Well, this has emerged since coming to office. One of the critical points that was in one of the very early conversations that I had with Admiral Mead was the need to get the capability yesterday. You know, as soon as possible. That what we faced was a capability gap. And that whilst the Life-Of-Type-Extension of Collins was an answer, it could not be the complete answer, because we all understand the diminishing nature of the capability of a diesel-electric submarine, and as I described to you on background, the ability for the process of snorting to be detected. So from that point of view, we made it really clear that we need a solution earlier than the early 2040s. And it's really one of the big breakthroughs that Admiral Mead has been able to achieve since the election, to get to a point where we are now having the ability to operate an Australian-flagged vessel in the early 2030s. An Australian-flagged nuclear-powered submarine in the 2030s. With nuclear-powered submarines operating from Australia, really in the next few years, you know, from 2027. And that will be a big step forward in terms of the capability in our country.

MEAD: This work we did the AUKUS partners over the last 18 months was an evolutionary process. We brought together the US and UK and we looked at a range of options and scenarios that could address those sort of parameters I mentioned before; enduring capability, how do we close that capability gap, how do we adhere to the NPT and do it safely and securely. Over many months, we worked this, we went over to US, we went over to UK. They came over here. We had something like 13 major in situ meetings of 50 or 60 people together. The Optimal Pathway that we put forward with the Virginias rotating out of Western Australia - we actually see that as a very elegant pathway into having sovereign control of our own Virginias and then the Virginias obviously addressing the capability gap. And then also, as a pathway leading into SSN-AUKUS. Each step, which is really an indivisible step of the Optimal Pathway de-risks the following steps out to the 2040s and 2050s.

REPORTER: You mentioned you'd offered a briefing to China, what was their response? And have you had any communication with the Chinese about AUKUS? What are they saying?

MARLES: We’ve had – as I say, we’ve offered a briefing. I have not participated in a briefing with China.

REPORTER: Did they respond? Did they reject the briefing?

MARLES: I'm not aware of that response.

REPORTER: Will the SSN-AUKUS project, will this follow the normal model of selecting a prime contractor? And which prime contractor would that be (inaudible)?

MARLES: Good question. We will, in the next year, determine the builder for the SSN-AUKUS and in that sense, we'll go through a process over the course of the next year to determine that builder. There is then, in addition to that, a build strategy that we will need to undertake, which really will concurrently happen through now, but 18 months - 18 months from now. And that really is making sure that we have a clear understanding of how a production line in the UK will operate in combination with a production line here in Australia. You know, you'll see certain capabilities which need to exist on both production lines, the most obvious being the final assembly of the submarine. But you're also going to see, I think, certain parts of the submarines built in one country for the run in both countries - if that makes sense. And potentially into the US as well. Now, the obvious to answer to that is a nuclear reactor. We've made it clear that we're not building a nuclear reactor here. So the nuclear reactors for the Australian and the UK submarines will be built in the UK. But I think that you will see Australian companies building elements of the submarines for both countries. And in that sense, you know, these are going to be quite connected production lines. So that's what we describe as the build strategy and the timeline for developing that strategy is the next 18 months, built on determining the builder over the course of the next year.

REPORTER: Just on defence procurement. Obviously Defence doesn't have the best record in recent years. Just last year, you talked about 18 were running $6.5 billion out of budget. What assurances can you give Australians that you and successive governments will be able to deliver these projects on time and within budget? Obviously, this is looking at a 30-year timeline here. So is there going to be an oversight mechanism, or what are we going to see?

MARLES: Again, a good question. Look, I mean, this is a huge endeavour. And I'll ask Pat to supplement the answer here. But the criticism that we've made of the former Government was a lack of oversight at a ministerial level in respect of key projects. Making sure that there were objective criteria by which projects were placed on the projects of interest, projects of concern, list. We take that into this. What you will see from this Government is active involvement at a ministerial level, hands-on, in terms of making sure that the timelines are adhered to, and we deliver this in the way that we are saying we're going to do. Now, in saying all of that, we understand the risk involved. I mean, this is a huge endeavour. And there are many risks that are involved which we could spend the next hour talking about. I mean, there are lots of things that keep you awake at night thinking about it. Which is why when we've made the arrangement with the United States, the three Virginias are there with a sense that we would have - whilst we'd begin constructing the yard for SSN-AUKUS now, begin constructing the process for the submarines for SSN-AUKUS by the end of this decade, and then having the first roll-off at the end, or at the beginning of the 2040s. In that event, we have three Virginias. But were those timelines to slip, there is the option to have four and then potentially five Virginias, so we are building in that (inaudible).

CONROY: I might make a couple of quick points. One, we announced very significant reforms to defence procurement in this room, in October. That will contribute to improved performance of defence. Secondly, as part of this announcement we've announced a dedicated agency that will provide a laser-like focus on delivering this project. Third, we've actually learned the lessons from past procurements, particularly the Collins class. So for example, that's why the DPM and I were so emphatic that we cannot have an orphan-class. The Collins was a developmental project, and it was also an orphan where no-one else ran it. So this is a project where it will be shared across two countries. There will be at least 17 submarines across the two classes, so that gives you the (inaudible) of scale. Importantly, as I said before, we will not be building the first of type of the submarines. The prototyping risk is being assumed by the UK, who are aiming for their first submarine to be in the water in the late 2030s. So it’s about half-a-decade gap between them. We're also giving ourselves more time: one of the past mistakes of defence procurements is building before you’ve got sufficient maturity of the design. So we’re giving us a suitable amount of time for the first submarine to be built in this country. Nearly 20 – or over 20 years by the time we do that. So we've learned the lessons. We've announced important reforms. We've de-risked this and will continue to de-risk this project.

REPORTER: Just building on one of the previous questions. If Congress have to approve this in the future, if America takes another dip into isolationism - it's not just a change of administration, but it's Congress that has to approve it. So, we have the Virginia class as a back-up to the AUKUS. But is there a back-up if something happens to that Virginia class, whether we can't get the first one, we can only access two, their production line slows down. What are we going to do in that case?

MARLES: I kind of don't want to delve into a critique or an analysis of the lineage of American politics and where it might go.

REPORTER: Well, their supply chains.

MARLES: I think the point really to make is this: if you look across the history of American politics, across all of those lineages - throughout all of that, the Alliance with Australia has been strong. That's point one. Point two is if you look across the existing Congress today, and the Biden Administration is doing exactly that right now in order to win the approval for those aspects of the arrangement which needs Congressional approval, they are finding support across the political spectrum. Both of those facts give me a sense of confidence about the future and how this will work. And you know, I mean, the American Alliance is very central to our world view. I've said, repeatedly, that I don't think that the American Alliance has been more important than it is now in terms of the period since the end of the Second World War. I say that in respect of the security guarantee that we get by virtue of that Alliance. But the technology sharing aspect of our relationship is also fundamentally important. And I have complete confidence that that will endure.

REPORTER: Joe Biden confirmed this morning that Australia isn't going to be providing the nuclear fuel for these subs. What does that mean for Australia's defence sovereignty when we potentially have a scenario where we can't fuel our own boats?

MARLES: Again a good question. And this has been an important part of the considerations that we've had in relation to how we have structured all of this. Sovereignty has been totally central to the decisions that we've made. We want the best sovereign outcome that we can possibly have.

Now, when we think about sovereignty with defence platforms generally, people need to understand, as I'm sure everyone does, that we often import technology of various kinds to operate within our Defence platforms, from around the world. From the US, but in fact, from around the world. So defence forces generally now around the world use shared technologies. And there is a sovereignty implication to that if you compare it to times past where everything was being made and developed within one country. That's just not the world in which we live today. But a sealed nuclear reactor which will exist for the life of the submarine itself is an excellent sovereign outcome. Because it doesn't need to be refuelled. In other words, we get the reactor and it's there and it's there until the end. And it does offer the opportunity for us to do the full maintenance of the submarine during the life of the submarine. And so, seen through the sovereignty lens, this is as good an outcome as you could want and it stands very much on par with the kind of sovereignty outcomes that we get through the importation of other technology and other defence platforms.

REPORTER: I know that the Government has committed to the second stage of the submarines being built in Adelaide for obvious jobs and industrial base reasons. But was an option open to us to continue to buy these things off the shelf in the second stage? Would our partners have been up for that and would they have had the capacity to deliver that given the risk of building these things domestically?

MARLES: There is a huge benefit in terms of jobs, which we've described, and Pat has described. There's a huge benefit in terms of what this will mean in increasing the technological capability of the wider Australian economy. There is no doubt about that. But it would be wrong to say that that is the only reason this is happening. It's almost a condition of our engagement in the AUKUS arrangement that what Australia brings to the table is a contribution to the net industrial base of the three countries. I think this is where people sometimes miss a point here. There is no magic showroom where there are a whole lot of Virginias on display and you can just pick one off the shelf. There is no shelf. The industrial base in both the UK and the US is stretched right now in terms of the production of their own submarines. And so, a critical part of this is that we have made a commitment to build an industrial capability in Australia which will contribute to the net industrial capability of the three countries, and so that is a critical element of it.

So yes, there is a fantastic dividend for the wider economy. But we need to do this as part of our contribution to the whole AUKUS arrangement.

REPORTER: Would you consider a step change in visa requirements to allow foreign workers to come to Australia to help us build these things given the fact that we can't even recruit baristas for our cafes. How will we get all of the workers here for defence? Will you consider a visa change to allow foreign workers to work on such projects?

CONROY: The simple answer is, we're going to train Australians to do this. As I said, apprentices starting their training today could work on this project for their entire working life. We're going to be training Australians to do this and we're confident that we're investing now to deliver that. We've talked about- there might need to be some discussions around visa arrangements to facilitate workers from Australia working on US and UK submarines and vice versa. But as Richard said, at the end of this AUKUS process, we need to go from three construction yards across the United Kingdom, Australia and the United States, able to make nuclear submarines to four - i.e. Adelaide. And part of that is having a sovereign Australian workforce that is part of that industrial capability. That's our plan. We'll look at visa arrangements if we need to around facilitating work experience and plugging gaps. But we'll be training Australians to do this job.

REPORTER: What kind of investment will be made in the east coast of Australia? And do you have any indication of where a submarine base would be located on the east coast?

MARLES: I'm aware that there has been a lot of conjecture about this, particularly in certain parts of the east coast. Let me say this: I think everybody who is engaged in that needs to take a very deep breath. This is a long way into the future. There is no decision about an east coast base which forms part of the decision that we have announced today. It is the case that the former Government announced the need for an east coast base, but we are taking our time here and all of that is a long way into the future.

Now, I'm trying my best here to give questions to people who haven't asked one yet.

REPORTER: Does there need to be a dry dock built at Henderson in WA to support the maintenance of these submarines?

MEAD: So we are looking at what facilities need to be put in place for Henderson and HMAS Stirling. We will not need a dry dock for the visiting US Virginia class submarines under the SRF-West model. The maintenance we would be doing there would not require a docking facility. But we are looking at options as we begin to take sovereign ownership of Virginias and SSN-AUKUS on what type of maintenance and sustainment facilities need to be developed to support that.

CONROY: And there's obviously a broader defence investigation of the dry dock for surface vessels, and you can expect a response from the Government as part of our DSR response.

REPORTER: On the regional response, and on the 60 phone calls or so that have been made by yourself and your counterparts – can you give us a sense of the thinking at the moment in countries like Indonesia and Malaysia? Do they remain uneasy about the prospect? Do you feel like you've assuaged some of their concerns? And perhaps Minister Conroy, if you could give us a sense of your interactions with Pacific leaders?

MARLES: It's a completely fair enough question. I'm really loathe to get myself into a space where I'm speaking on behalf of other countries. So ultimately, you're asking how are they reacting. I'll ultimately leave it for them to give that reaction.

I'd simply say that an awful lot of effort has gone in here. We have done a lot of diplomacy, and the Foreign Minister has led that. We feel like we're in the best position we can be in in terms of the acceptance of our neighbours and the world of the decision that we are making. I can say that in terms of the conversations I've had, and I think Pat would be the same, and I've spoken with both Penny and the Prime Minister – they've all been pretty constructive calls. We've all been very comforted by the sorts of conversations that we've had. And I think the effort that we have put in in relation to providing transparency here to our neighbours and to our friends has been welcomed. But it is ultimately a matter for them to provide the definitive reaction, obviously.

But I do want to make this point: We are - we're investing in our Defence Force, and we are increasing our capability. Our military capability. And we anticipate that we will spend more on defence going forward. That's a big thing to do. In doing that, we want to be completely transparent with our neighbours and with the world about what we're doing and why we're doing it. You know, what our strategic intent is. Our concern about other military build-ups is that they happen in a manner which is opaque. And where neighbours are left uneasy as to why it is occurring. That is why we have gone to such an effort to make clear exactly why we are taking the steps that we're taking.

CONROY: I think Richard is absolutely right. And it's not for me to speak on behalf of the leaders of the Pacific. I just make two points. They generally welcomed the opportunity to be briefed ahead of the announcement. The gesture of that is very important. Operating on a transparent and respectful manner is critical, and I think it's something that this government is very committed to. Secondly, our emphasis on the fact that what we're doing is completely consistent with the Treaty of Rarotonga is vital, and that’s why the DPM mentioned it in his opening statement. Everything we’re doing is consistent with our international obligations and our deep commitment to non-nuclear proliferation.

REPORTER: A lot of people would be sceptical of Australia’s ability to run two different types of nuclear submarines given that we haven’t ever done one. What do you say to those critics?

MARLES: I think as the Admiral has pointed out, we've got a really considered step-by-step approach as to how we build our capability from this day through to the point that we are operating and, indeed, making the nuclear submarines in Australia. And when you look at that – and that's why I've described it as a pathway. When you look at that Pathway, there's no kind of big step along the way. What there is a gradual evolution, which is beginning right now. You know, there are Australians right now doing courses in the US right now in relation to this. We will have Australians on Astute class submarines right now. And so, we are, we've got the time to do it and we are doing it in a thoughtful, considered, step-by-step way.

CONROY: So I just wanted to emphasise the point that to be very clear, we're already working in maintaining the combat system that is jointly developed between us and United States. The same for the heavyweight torpedo. They will be common to the Virginia class and the AUKUS class. Also what will be common will be the vertical launch system, and they’ll also have similar propulsion systems. So as Admiral Mead and DPM said, there’s a huge amount of commonality across these platforms that will make it much easier for the operators, but quite frankly, much easier for the maintainers. And that's a really important part of this process that we need to be very clear about.

REPORTER: There seems to be some confusion this morning about the rate at which Australia can be building the AUKUS subs. Is it every two years, or every three?

MARLES: Three.

REPORTER: And does that mean that by about 2054, ideally, we'd have a fleet of eight that being three Virginia and five –

MARLES: Yeah. And obviously that is based on being able to have the first of the Australian built submarines rolling off the production line in the early 2040s. You know, were that to slip, that's where there is the option to have more Virginias.

REPORTER: Is it hypocritical of China to protest Australia acquiring this technology, given they themselves have a fleet of nuclear-powered submarines? And how much of this is being shaped by the rise of China?

MARLES: We're making decisions in the Australian national interest. We are making decisions against the backdrop of the strategic landscape in which we said at the outset – and that is a landscape which in turn is shaped by a very significant military build-up within our region. But ultimately, the strategic intent behind Australia acquiring this capability is to provide for the collective security of our region, or to contribute to the collective security of our region, and to contribute to the maintenance of the global rules-based order. That is the totality of our intent. And that is the totality of our intent in a context where we understand that the defence of Australia is only relevant where you have a stable region in which there is collective security. So that's the basis upon which we're acting. That is the frame through which we are making our decisions. And that's how we see (inaudible).

REPORTER: Was it appropriate of Peter Dutton to single out the NDIS for cuts to pay for this? And Mr Conroy could I ask please, can you confirm that it's $3 billion dollars that we're investing in the US industrial base and explain the rationale behind that?

MARLES: Again, I'm not going go into a budget press conference and start talking about other programs. We do anticipate the defence budget to grow. Clearly, this acquisition is part of that story. And there is a long way to run it. But as I've said often, in in growing the defence budget, I think it's really important that Defence in turn is exposed to all the budgetary fiscal disciplines which exist within the broader government. And that's what we've endeavoured to do over the last 10 months. There’s no ring-fencing of Defence. Defence needs to justify its expenditure and demonstrate value for money just as any other part of government must do. So I think it is a really important down payment, if you like, on the part of Defence, to say that as we start this journey in relation to the acquisition of the nuclear-powered submarines, we do so in a way which is budget neutral from a Defence point of view, over the next four years. Not it won't be that going forward, and, as there's more of a story to tell when the Defence Strategic Review is announced in a month's time. But you can see that as we walk forward, we are doing everything we can, while we see a great defence budget, to make sure that Defence is doing its part in enabling us to acquire (inaudible).

CONROY: On your second question, as is in the papers, we'll be spending slightly over $3 billion dollars on industrial uplift in the United States and the United Kingdom over the next four years. The vast majority of that money will be in United States. Let's be very clear about this. This is to support the US, their investment, their very significant investment to increase their sustainment performance, so that they have more Virginia class submarines available. And secondly, to ramp up their production. This is critical, and quite frankly the interim capability would not be delivered unless we were supporting the US efforts to get more Virginias into the water.

This is because of a capability gap we face because of the 10 years of delay. The Collins class will start being retired around 2038. Without securing the Virginias, we face a significant capability gap, and the only way you secure the Virginias is to support the US to have more available so that they can sell something to us. That's the first point.

The second point is, in the same timeframe as we’re making that payment – supporting that payment for uplift, we will be investing $6 billion in uplifting the Australian industry; in skills, apprenticeships, infrastructure, qualifying Australian suppliers into US supply chains. $6 billion over the next four years, and around $30 billion over the life of the program on industrial uplift alone. So that's really important context for that $3 billion, which is a critical way to secure the Virginias.

REPORTER: Will the AUKUS subs have the same design of reactor as future US submarines? And secondly, can you just confirm the budget does not include any allocations for an east coast submarine base?

MARLES: The east coast base is a long way in the future, is the answer to that question. I know it’s not a complete answer, but it’s the practical answer to that question. The nuclear reactors that we will be operating will be similar to the US design.

REPORTER: In light of the issues with Defence to retain its permanent staff, what are the plans in place to actually deliver this, specifically defence workforce capabilities going forward with AUKUS, especially if incentives that have been provided to those staff haven't been working?

MARLES: A good question. I mean, so there's kind of a macro answer that question across the Defence Force and then a specific answer in relation to this capability. We have seen in the last – since the pandemic, a reduction in the size of the Defence Force. That’s not a budget thing, that's actually people leaving and not having a retention rate that we would want to have. This is, this is a real issue that we've inherited from former Government that we need to turn around. And at the heart of that is about making the Defence Force a more attractive place to work. The Defence Force home ownership affordability scheme is something that we committed money to in our very first budget to try and make Defence a better place to work. But there is a lot more that needs to be done there. And we've got a new recruiter, Adecco, and part of their contract is about reducing the recruitment time so that we can get people into the Defence Force at a quicker rate from when they first expressed an interest in going into the Defence Force.

So there are lots of challenges that we face. It is a big issue and we're going to need to meet it. Not just in respect of submarines, but across the Defence Force generally.

In respect of submarines specifically, we're going to need to grow an enhanced submariner cohort relative to what we've got right now. And that's why both the increased tempo of visits from this day forward, but also for rotation from 2027 at HMAS Stirling is so important, because it really does, in a structured way, give us the opportunity to grow that submariner workforce so that we have what we need by the time that we start flagging our own vessels.

REPORTER: Just on that, when the Morison Government announced the plans for the east coast base, they argued it was important a) for strategic reasons, but b) it would lure more submariners, because not everyone wants to live in WA. Is that still a consideration, or are you going cold on this whole idea of an east coast base?

MARLES: It's a fair question, Phil. We’re not, it's just that there's a whole lot of speculation right now that the decision is imminent, and it's not. And it wasn't put forward as being imminent by the former Morrison Government. We understand the logic of an east coast base. It forms part of the considerations that have been undertaken by the Defence Strategic Review. And you will hear more about it from the Defence Strategic Review. But let me be clear: the Defence Strategic Review will not identify an east coast base, it does not do that. But the logic of having an east coast base is something we understand and accept, but it is a long way in the future. And so the idea that we are about to be making that announcement just isn’t right. Thank you.

ENDS

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