Related ministers and contacts
The Hon Pat Conroy MP
Minister for Defence Industry
15 March 2023
SUBJECTS: AUKUS agreement, defence funding, upskilling Australians
GLEN BARTHOLOMEW: Well, Acting Prime Minister and Defence Minister, Richard Marles, will be in Adelaide today signing a cooperation agreement outlining the AUKUS agreement that will see the construction of the country’s eight submarines. The extraordinary cost of the nuclear-powered sub program is already forcing the Federal Government to wrestle with some difficult budget choices – lots of questions about where the money for it will come from.
Meanwhile, China says it will lobby other countries to back its claim that Australia and its AUKUS submarine partners are breaching global rules on the spread of nuclear weapons. It’s been just over 24 hours since the historic plan was unveiled in San Diego, and reaction has been flowing thick and fast to say the least.
Let’s hear from the Government – Minister for Defence Industry, Pat Conroy. Minister, good morning.
MINISTER FOR DEFENCE INDUSTRY, PAT CONROY: Good morning, Glen. How are you?
BARTHOLOMEW: Not bad at all, sir. Between $268 and $368 billion to be spent over the next three decades. Some are predicting it could probably run higher than that. Where is that money going to come from?
CONROY: Well, that’s not the Government figure that we’re using. We think that the figure of 0.15 per cent of GDP is a more accurate measurement of what the cost is of this national undertaking. This is an incredibly important announcement. It is the greatest capability uplift the Australian Defence Force has ever seen. Its critical capability will really help deter potential adversaries and at the same time it will create 20,000 jobs and modernise Australian manufacturing.
So, it’s an incredibly important national effort. It’s the greatest industrial undertaking this country has ever attempted, surpassing the Snowy Mountains scheme, for example. And so, we’ve been very transparent with people about the costs involved with that. But those costs will be accounted for in the normal budgeting procedures over the next 30 years. So that’s very important for people to know.
BARTHOLOMEW: Let’s be transparent. Nothing’s probably more certain – and you know this better than most in your portfolio – than a blowout in costs for a major defence project. It’s happened time and time again. Why would this be any different?
CONROY: The two reasons I’m expressing confidence is, one, that the 0.15 per cent of GDP includes a very significant amount of contingency. You obviously only use contingency when you hit challenges, so it’s very important to note that the 0.15 per cent of GDP includes a significant amount of contingency that I can’t disclose for commercial in confidence reasons.
And the second reason is that we’ve learned the lessons from previous defence procurements, particularly the Collins class submarines, for example. There’ll be a dedicated agency whose one task is to deliver the submarines. Secondly, we will not be having an orphan fleet, and the challenges for the Collins class was that we were the only country running them and developing them. It was a very developmental project – we were designing and building an orphan class. And, thirdly, we won’t even be producing the first-of-type of SSN AUKUS; the United Kingdom will be building their submarines ahead of us.
And, in fact, the current planning is their first one will hit the water around half a decade before our first one. So, they’re really taking on the prototyping risks. And, as you know, Glen, the first-of-type of these projects is often most fraught with danger – or danger is the wrong word – most fraught with challenges and complexity. So, the fact that we don’t have that risk is very important.
BARTHOLOMEW: Others aren’t so optimistic, suggesting that perhaps we’d be looking more like a figure of two and a half upwards to closer to 3 per cent of GDP for our defence budget going forward. We’ll find out, I guess, soon enough as the years and decades roll around.
In the meantime, the Acting Prime Minister and Defence Minister, Richard Marles, is flagging changes within Defence to help cover the cost of a new fleet of nuclear submarines. He says there are other changes that can be made.
DEPUTY PRIME MINISTER, RICHARD MARLES: We are looking about ways in which we can make sure that our Defence Force is tailored to giving effect to the strategic posture that we need to take. And that does in some respects require more capability – the submarines being an example. But there are other areas where we don’t need quite the same capability as has been planned in the past.
BARTHOLOMEW: So where might the other defence cuts be? Has a decision be made on where they might occur, Pat Conroy?
CONROY: Well, we’ve flagged that over the forward estimates, over the next four years, this announcement will be cost neutral. It cost $9 billion over the next four years, $6 billion of which will be paid for by the remaining money from the Attack class French submarine, over the four years. And the other $3 billion will be found by reprioritising projects within the Defence Integrated Investment Program, which outlines all our investments over that period.
As the Deputy Prime Minister said, those projects will be announced during the budget process in a month’s time. They will be made public then. But it’s very important that people know that within the Defence portfolio projects are reprioritised all the time. Some are brought forward as their strategic importance becomes clearer – for example, I announced the acquisition of HIMARS mobile rocket systems earlier than planned in January. And other projects as they become less strategically important are either pushed backwards or cancelled. That’s normal. And that will be accounted for over the next few weeks.
BARTHOLOMEW: And that shift in priorities and what we do and don’t need will be reflected more broadly, I guess, in the Defence Force Review when it’s handed down in the coming weeks as well. It is all about a change in posture, a change in approach to keep anyone at a distance from Australia. So, some things that we’ve pursued in the past mightn’t be required in the future.
The Opposition has said that they would happily support some savings in the budget but don’t seem to want Defence to be part of that, the suggestion that we shouldn’t be cannibalising the Defence Force in the name of AUKUS. What’s your response to their position now?
CONROY: Well, Peter Dutton’s got no credibility on this he’s just trying to play pity politics. This is a Defence Minister who presided over 10 years of waste and inaction in the submarines. First, they were going to offshore the work to Japan then they were going to do it with the French, and then they cancelled the contract with the French, and now we’re dealing with the 10 years of delay which meant that we had a very significant capability gap with the Collins class retiring, which meant that we had to find the interim solution of acquiring the Virginia class submarines. So, the Opposition has zero credibility when it comes to the submarine announcement.
And as for his broader point, he’s just being incredibly hypocritical. To fund the project REDSPICE, which is a very important investment in the Australian Signals Directorate, he cancelled Defence projects including a $1.2 billion project for armed drones.
BARTHOLOMEW: All right.
CONROY: The SkyGuardian project. So, this is a guy who’s got no credibility in this area.
BARTHOLOMEW: All roads seem to lead to South Australia today and in the coming years for the construction of some of these boats. South Australian Senator Birmingham has questioned why the construction start date for the boats is 2040. And that’s been echoed by some South Australians as well. Why can’t this begin any earlier?
CONROY: Well, we’re starting construction as soon as possible. And, again, without being political about it, Senator Birmingham’s position is incredibly hypocritical. We are starting construction on the submarine yard this year. You have to build the yard before you can build the boats. We are recruiting workers right now to build the boats and we are intending to cut steel to start production by the end of the decade, which is the earliest we can start.
So, for Senator Birmingham to complain about this is like the arsonist complaining about how long it takes the fire brigade to get to the house he’s burnt down. This is 10 years of delay and inaction that his government when they were in power caused, and now he’s complaining about how long it’s taking for us to clean up the mess. The truth is we will create 20,000 jobs in this process. We will start the construction of submarines as soon as possible. And that will lead to eight and a half thousand direct jobs building and sustaining the submarines.
BARTHOLOMEW: And who’s going to do those jobs, Pat Conroy? Like many countries, Australia is famously experiencing workforce issues. We’ve got a big skill shortage in some of these crucial areas. How are you going to find enough people or entice young people of our own to study engineering and nuclear science and the like to the extent that you’ll need them?
CONROY: Well, we’re doing a novel thing, and that’s training Australians to do this rather than poaching people. And one of the announcements Deputy Prime Minister Marles and I will be making with the South Australian Premier today is further details about establishing a skills academy in South Australia that will actually recruit and train young Australians to work on this national endeavour. This is a huge opportunity. Apprentices starting their career today could work their entire life building these submarines, which is tremendously exciting.
So we know there’s a task ahead of us of training Australians. But we’re committed to that. And we’ve got a length of runway that will allow us to do that. We will start taking in apprentices and graduates over the coming months and will build that up over time.
BARTHOLOMEW: All right. Some people might end up working in transferring and disposal of nuclear waste. Part of the AUKUS deal is Australia has to dispose of its own nuclear waste and do it here in Australia. How are you going to manage that? Where will this waste be disposed of?
CONROY: Well, we made it clear that we will establish a process to identify the location over the next 12 months. We've been very clear that it will be on Defence land. That is a very important statement that people need to take some comfort from. We will take responsibility for disposing and storing of the reactor and associated nuclear waste.
BARTHOLOMEW: That could be Defence land that you own now or will acquire soon?
CONROY: One of those two options.
BARTHOLOMEW: All right.
CONROY: And, as I said, the process is over the next 12 months.
BARTHOLOMEW: Pat Conroy, lots to do; we’ll stay in touch. Thanks for joining us.
CONROY: Thanks, Glenn. Have a great morning. Bye-bye.
BARTHOLOMEW: Minister for Defence Industry, Pat Conroy, on some of the mechanics and the cost of that big AUKUS submarine project.
Other related releases
Transcript - In Conversation with Christopher Pyne
Doorstop Interview, HMAS Stirling, WA