14 March 2023
JIM CHALMERS, TREASURER: This is a great day for Western Australia and I'm really proud and really pleased to be here with Minister Papalia, to be here with Minister Matt Keogh, to be here with Minister Madeleine King, to make what is a game changing announcement for our national security, our national economy and also for the great state of Western Australia as well. I'm really pleased to be here at South Metro TAFE because so much of what we want to achieve with this game changing investment that we're announcing today relies on training up, skilling up and providing more opportunities for more people in WA and right around Australia as well.
Now, earlier today Australian time in San Diego, in Canberra and in Adelaide, the Prime Minister, the Deputy Prime Minister, the Defence Industry Minister and the Foreign Minister have talked about what this game-changing deal means for the future of our national security arrangements and what I wanted to do today is I wanted to be here in WA with Matt and Madeleine and Paul, to explain what this means for Western Australia and also what it means for the national economy. And before I do that, I wanted to pay tribute to Premier Mark McGowan for his tireless, persistent, dedicated advocacy on behalf of the people of WA. He is unwell today, we were hoping that he would be able to join us but in his absence. Can I say how much I appreciate personally, and how much the Albanese Government appreciates our ability to work really really closely with Mark, as Premier and as Treasurer of WA and his Cabinet, and Paul and his colleagues as well. What you're seeing today is what is possible when the Federal Government in Canberra and the State Government here in WA work together to get the kinds of outcomes I'm really proud to announce today.
This is the biggest industrial undertaking in Australia's history and Western Australia is absolutely front and centre. This means more investment, more jobs, more opportunities, and a better future for this state. It's a game changing investment in our national security in our national economy and in the state of WA. And what this AUKUS announcement means today is an $8 billion investment over the decade in the future of Western Australia, its workers, its industries and its economy which will create around 3000 jobs plus another 500 or so when it comes to SRF-West and I'll come to that in a moment.
Our TAFEs like this one and universities right around Australia will train the generations of workers that we need to get this job done. Now today's announcement recognises the absolutely central role that WA plays in our national defence and today's announcement means WA is even more foundational to the future of our defence forces in this country.
There are four main elements of particular relevance to WA when it comes to the announcement today. First of all, we will upgrade the wharves, expand the maintenance, training and logistical capacity at HMAS Stirling. Secondly, there'll be more and longer visits of American subs from this year and UK subs from 2026. Thirdly, Stirling will host rotations of US and UK subs from 2027 as part of submarine rotational force West - SRF-West will see rotations of Americans and the Brits from 2027. And fourthly, this will be the home to Australian nuclear propelled subs when they begin to arrive from the early 2030s as well.
Now, this is a big investment that we're announcing today, but it has big returns as well. I talked about the $8 billion over 10 years in WA, a billion of that in the forward estimates, thousands of jobs for Western Australia and for the nation. The forward estimate cost of the whole program is $9 billion over the forward estimates that will be completely offset by defence so that the combination of the $6 billion provision for the attack class plus $3 billion dollars of additional offsets will mean that over the forward estimates, this plan that we announced today won't add to the deficits over the four years of forward estimates. The 10-year cost is between 50 and 58 billion dollars. Included, or part of the offset for that will be the existing $24 billion provision for the attack class. Over the life of the project, it will cost an average of .15 per cent of GDP averaged over the life of the project until the middle 2050s. It's important to recognise today is not a day for partisan politics but it's important to recognise that what we've provisioned for in our Budget is much more substantial than what our predecessors provision demands. The cost that we are estimating and announcing today includes some of the costs that our predecessors did not provision for when it comes to sustainment when it comes to training and some of the other important elements of cost that we're talking about today. We're being upfront about the cost of this - yes it is an enormous investment but it also will deliver enormous returns for our national security and our national economy and here in Western Australia as well.
This is a transformational moment for our national security, for our national economy and for this state of WA. This will deepen and broaden our industrial base and it will help create generations of prosperity and opportunities for more people in more parts of our country as well. It's all about security, stability and resilience in our region but also in our economy. The Prime Minister said to President Biden earlier today - yes this is a national security policy but it's also an industrial policy and it's also an economic policy which will deliver big dividends for our national economy and our people. These are uncertain times and these are ambitious plans. The people of Australia will rise to this occasion and when they do, the people, the workers, the students of Western Australia will be absolutely front and centre in the effort to make this deal that's announced today a reality and to deliver in all of the ways that I've outlined today.
PAUL PAPALIA, WA DEFENCE INDUSTRY MINISTER: Thanks Treasurer. This announcement today confirms defence industry as a central pillar in the diversification of Western Australia's economy forever. From today, Western Australia will build on its already substantial capability to sustain conventional submarines, we will build an entire new capability to sustain different submarines. It means thousands of jobs and billions of dollars of investment for Western Australia. It means an opportunity for young Western Australians to enter an entirely new career path and know that there is an opportunity there for their entire lives.
It's no mistake that we're here in South Metro TAFE. This facility is the leading tertiary institution for defence industry in the country. They won an award last year at the defence industry awards that confirm that. They are the best trainers of defence industry technicians and trades people in the country. We will now work with them and other players in the Western Australian defence industry to build our capacity to sustain and support our nuclear submarines and our submariners to ensure that the nation has this new capability. Western Australia is the home of our submarines and our submariners and this announcement confirms that again today. It is good to hear that there'll be more submariners visiting from our allies - that's further opportunity for the state, further opportunity for our industry, but also our wider economy as people come and visit and invest in the state. It will be an exciting time for our young people who can see there is another opportunity, another economic contributor here in defence industry that's going to be every bit as certain and serious and large as our resources sector. Young people in this building right now thinking about working - normally they'd be considering going into the resources sector or perhaps increasingly into the marine environment but here with the defence nuclear submarine capability announcement, it gives a whole new opportunity and I look forward to working with the Federal Government to ensure that we step up as a state and do our part to sustain [INAUDIBLE].
MATT KEOGH, DEFENCE PERSONNEL MINISTER: Thanks Paul. The announcement by Prime Minister Albanese, President Biden and Prime Minister Sunak today about the optimum pathway towards nuclear powered submarines for Australia is incredibly exciting and of course important. It strengthens our national security and it improves regional stability. Importantly, it also delivers on our commitment to a future made in Australia and it results in an uplift in our capability and filling capability gaps left by a decade of inaction by the previous government. But here in Western Australia also submits the primest position of HMAS Stirling and Western Australia as our submarine base - where our submariners are based, where our submarines will be operating from and shortly we will see forward rotation of submarines from the US and the UK. And that is a game changer for Western Australia as it is for our capability nationally. It will mean an $8 billion dollar investment into upgrades at HMAS Stirling, expanding the infrastructure available there to support our future submarines. It will mean 3000 people are directly employed in that work, but importantly also an additional 500 people directly employed in the sustainment that will be provided to those American and UK submarines getting ready to sustain our own sovereign, nuclear powered submarine fleet. And it's not just the direct employment, it's all of the indirect employment and industry development building on that advanced technological development that we need to see in Australia and that will come across Australia and particularly here in Western Australia as we stand here in South Metro TAFE, it's the skills that will be born here, developed here that will be so fundamental to executing on this very important nation building plan for AUKUS nuclear powered submarines operating out of Western Australia. And of course, we will be building a defence workforce to go with that, an industrial base to go with that and the workforce for many generations to come. This is a game changer for our nation, and it's a game changer for Western Australia as well.
MADELEINE KING, RESOURCES MINISTER: Well, welcome to Rockingham the home of the Royal Australian Navy's largest naval base and proud hosts of the Collins Class fleet of submarines. Thirty-six years ago my predecessor and Former Member for Brand Kim Beazley announced the two oceans policy which made the Indian Ocean one of the secondary alongside the Pacific Ocean the most important new theatre that Australia would have to work in for the Royal Australian Navy. This led to HMAS Stirling becoming the base that it is today. Right across this electorate, across the cities of Kwinana and Rockingham as Mr Papalia said, we host the submariners of our Navy and we all welcome this extraordinary announcement from our government today. It is a city and suburbs that support HMS Stirling, support visiting submarines and truly welcome the fact that there will be more submarines visiting here and that we will host an ongoing capacity of submariners, their support people, the technology, the training that will have to go with it and equally the infrastructure build that, as the Treasurer said will bring $8 billion over the next decade to Western Australia. And that will be very important for Rockingham as it seeks to be a really enthusiastic partner for what Australia is doing here today in securing this extraordinary capacity. It will be transformational for the city of Rockingham and the city of Kwinana and all of those that live in it. And I know my electorate and my constituents have always been supportive of the capacity we have here at HMAS Stirling and what this announcement today will bring will be even more important for them into the future. Thank you. I'll hand back to the Treasurer.
JOURNALIST: Have you put a timeline on what upgrades to HMAS Stirling [INAUDIBLE].
JIM CHALMERS, TREASURER: Well, obviously what we're signalling today is a big game changing investment in HMAS Stirling - a billion dollars over the next four years, $8 billion over the next 10. And as the Deputy Prime Minister has flagged in Canberra earlier today, we will now work with partners here in WA and in other parts of Australia to turn this big game changing investment into reality. There's more work to be done when it comes to procurement, when it comes to the quite specific planning but our commitment today is this big investment in Western Australia. It will be all about making sure that the infrastructure at HMAS Stirling can accommodate the increasing visits and the rotation of forces and when they arrive in the early 2030s, our own nuclear propelled subs. But we will now engage in consultation with state government colleagues but also with industry here in WA, to set out the timeframe to make that investment a reality.
CHALMERS: Australia can't afford not to do this. This is a key investment, it's a big investment but an important investment which will deliver huge returns for our country for our security, and for its economy. In offsetting $9 billion over the forward estimates, we are not adding to the substantial pressure which is already on the budget. Beyond that, we've already got the $24 billion attack class provision, as the beginnings of offsetting what we can from the 50 to $58 billion cost over the coming decade. We know that we've got substantial pressures on the budget, the big five fastest growing areas of spending on the budget, the interest costs on the Liberals’ trillion dollars of debt that we inherited, the NDIS, aged care, health care and defence. What we've shown here is an ability to offset the cost of this over the forward estimates, partially offset the cost beyond that. But this is a game-changing investment, it will be worth every cent when it comes to our national security, our national economy, and the local economy of WA.
JOURNALIST: Will the Government revise the stage three tax cuts?
CHALMERS: Our position on the tax cuts hasn't changed. We've made it clear in other ways, that we do need to find ways to make the budget more sustainable over time. The very modest but meaningful change that we announced a couple of weeks ago, for example, to superannuation, will make the budget a bit more sustainable over time. But we've got those five big pressures on the budget - defence is one of those, this is necessary spending. And we need to make sure that we can find ways to make the budget more sustainable more broadly.
JOURNALIST: A revision of those tax cuts would go a long way to pay for this deal though?
CHALMERS: Our position on those tax cuts hasn't changed.
JOURNALIST: You say Australia can't afford not to do this, what's the consequence if it doesn't?
CHALMERS: We've already wasted a decade when it comes to these kinds of investments in our national security, and that wasted decade has cost us dearly. The Australian people are paying a hefty price for it, whether it's in defence procurement, or whether it's more broadly in the economy. And so we need to get cracking on investing in the future of defence, but also the future of our economy. This is as much an industrial policy and an economic policy as it is a national security policy. In the absence of this kind of investment, the kinds of jobs and opportunities which flow from this kind of game-changing investment for the types of people who are learning trades here at South Metro TAFE, those missed opportunities would be immense. We've wasted too long as a country, the wasted decade has cost our people dearly. We don't want to have another decade like the last. That means making these kinds of investments, but not just announcing these investments, but making sure that we get value for money. And we measure value for money in terms of what it means for our national security, our national economy, and also for communities like this one.
CHALMERS: We will continue to work with Australian naval infrastructure and the WA Government, in developing options for large vessel infrastructure, and Henderson. The dry dock is part of the considerations of the Defence Strategic Review that the Deputy Prime Minister will release between now and the Budget in public form. But we have said before, and we say again, that we continue to work with everyone involved in Henderson and the dry dock to make sure that we get the right outcome.
JOURNALIST: China’s Global Daily has called this morning’s announcement an expensive mistake and equated it to planting a bomb. Has this announcement made Australia and particularly WA, a target?
CHALMERS: First of all, I'm not interested in a war of words about this. This is about a safe and secure and peaceful and prosperous region, and it's about Australia's sovereign capacity in the region. I think all sides - all countries in the region, including China, including Australia and all of the others - I think we all have an interest in maintaining peace, prosperity, safety and security in our region. And the announcements that we made today need not necessarily be an affront to anyone. This is about Australia investing in its own national security, its own capacity, its own industrial capacity, and jobs and opportunities into the future. We do that because we want a region which is wealth generating, opportunity creating, peaceful, prosperous, safe, secure and stable.
JOURNALIST: Are there any security implications by basing nuclear submarines from other powers and our own submarines here?
CHALMERS: Obviously, all those sorts of considerations are important to the work of Defence and the Defence Minister. But of themselves, we think that these rotations here, the more frequent longer visits in the near term and the rotation as part of SRF-West, into the medium term, this is an important opportunity for WA. It's an important opportunity to make sure that our people can be sovereign ready when the time comes. That means embedding them with the US, and in time UK teams. It means more frequent and longer visits. It means rotational opportunities for US and UK subs as well, so that Stirling is ready when the time comes to be the home of our own nuclear powered submarines.
JOURNALIST: Is it jarring or just reality to equate promoting peace and stability with a military build up and is there a risk of sparking a new arms race?
CHALMERS: Every country makes its own decisions about its own national security, and about its own sovereignty. That's what this decision is today. As I said before, we've had this wasted decade - and Matt covered it well in his contribution - the idea that we would continue without making these kinds of investments, game-changing investments in the future of our submarine fleet - I don't think that's realistic. We make our own decisions, we make the right calls for the right reasons, and that's what this is today.
JOURNALIST: Victoria's Treasurer believes the way GST is being distributed is a ridiculous distortion, wanting an end to the specific WA deal. What's your response?
CHALMERS: I say to Treasurer Pallas, who is a friend of mine, someone I have a heap of respect for; the GST deal ensures that no state is worse off, including Victoria. And that's the deal that we've committed to. This is the undertaking we've given here in WA on multiple occasions, and I don't think I've been to WA in the last couple of years without being asked about it. And it's an important opportunity for me to respond to some of the absolute rubbish that Michaelia Cash and others have been saying in recent days. Today, the Commonwealth Grants Commission releases the new relativities for the GST allocation. And I'm proud to say, and pleased to say that instead of getting the 10 cents in the dollar that WA would have been entitled to under the old regime, its lowest ever, WA will be getting 70 cents in the dollar. And the difference between that is $5.6 billion next year. This is a deal that we are committed to, this is a deal that we are proud of. This is a deal that ensures that we recognise that the Western Australian economy often keeps the wheels of the national economy turning. This is a $5.6 billion thank you to the people of Western Australia for keeping the wheels of the national economy turning, not just in recent times but before that, as well. I've said to Premier McGowan and Treasurer McGowan - I've said publicly and privately here in WA - we don't intend to change that deal. The Liberals are lying when they say that is the case. There are regular and routine reviews which happen all the time, and to Treasurer Pallas and all of my other friends, the treasurers from around Australia, the current arrangements ensure that even as WA gets this funding that they deserve, the other states aren't worse off.
JOURNALIST: Will you commit to extending that beyond 2027?
CHALMERS: That's not due for consideration until, as you say rightly in your question, some years down the track. We'll consider that at the appropriate time. But what's not under consideration, what's not up for review is the GST for here in Western Australia. We've said that on countless occasions. We will engage with the state treasurers in the usual way, at the usual time, when it comes to that review of the no worse-off guarantee, which is still some years away. I've communicated that privately and publicly to all my colleagues from right around Australia.
JOURNALIST: If it’s as good as you just said, and keeping all the states as happy as states can be, why not commit to extending that beyond 2027? It’s only four years away.
CHALMERS: It's four years away.
JOURNALIST: It’s only four years away.
CHALMERS: There's a fair bit to do between now and then - four years away. When the deal was done, with our support, to give Western Australia its fair share of GST revenue, we proudly supported that deal. We have implemented it in government. It's meant that we have funded multiple billions of dollars to other states, to ensure that they aren't worse off. They know and you know, that when the deal was first struck, there was a review built into it, which is still some years away. We'll turn our minds to it at the appropriate time.
JOURNALIST: Treasurer, are you confident that the Mint and the state government take their responsibilities seriously enough when it comes to money laundering, and what do you make of allegations that the Mint may have potentially been allowing money laundering and sanctions evasion to be taking place?
CHALMERS: Incredibly concerning, these are incredibly concerning revelations. I am confident that my state colleagues are taking matters seriously, as is the Federal Government. These are very serious revelations which have been uncovered in recent times. AUSTRAC has appointed an auditor to assess the Mint's compliance with all of the various arrangements, including the anti-money laundering arrangements. That report is due to AUSTRAC soon. And when we get that report, we'll obviously consider it. But I'm sure everybody understands, since these revelations were made public that they are very troubling, very concerning. AUSTRAC has kicked in a process which is appropriate, and we'll consider the results of that when they're available.
JOURNALIST: [INAUDIBLE] for the WA Government to back the Perth Mint?
CHALMERS: That's a matter for the WA Government. My role is to make sure that we are taking it seriously and we are, that AUSTRAC is taking it seriously and they are. We will get the outcomes of the independent report before long, the audit, and we'll respond to it then if we need to, and no doubt the WA Government will do likewise.
JOURNALIST: Will that audit be made public and is an independent investigation also needed into the gold doping program that’s run by the Perth Mint?
CHALMERS: Let's see what it says first.
JOURNALIST: How important are the sanctions your government’s put in place and what sort of an affront would it be if they were undermined by the Perth Mint?
CHALMERS: Let's see what the external auditor says when they come back to AUSTRAC. We take it seriously, the West Australian Government takes it seriously. They're very concerning revelations, we'll know more when we get the outcomes of the external audit. Obviously, there'll be discussions with AUSTRAC at that point, and discussions more broadly about the sanctions regime and other necessary steps that may or may not need to be taken. Thanks very much.