Radio interview, ABC AM

SUBJECTS: AUKUS

SABRA LANE, HOST: To the AUKUS submarine deal. Was the Government warned by Defence or intelligence agencies that this plan might escalate tensions in the Indo-Pacific or even prompt other nations to more rapidly boost their own defences?

RICHARD MARLES, ACTING PRIME MINISTER: Well, really, this is about contributing to stability, to balance and ultimately to peace in the region. That's the impact of what we're doing. I mean, we live in a region where we are witnessing the biggest conventional military build up that has occurred since the end of the Second World War. Australia is not doing that.

LANE: You're talking about China, aren't you? You're talking about China.

MARLES: Well, that is the military build up that we've seen and that shapes the environment in which we live. And we've got to make sure that we act prudently in respect of that, because to do anything different would be having us condemned by history. And we've got to make sure that we're in a position where we can provide for our self reliance going forward and that we can provide for our own safety and security. And that lies in making our contribution to the collective security of the region and the maintenance of the global rules-based order within the region.

LANE: The nub of that question, though, has Defence or even intelligence warned you that this could prompt other countries to more quickly boost their own defences here?

MARLES: What we're doing is providing our contribution to balance and stability in the region. That's the effect of the decision that we are making. And we've worked really closely with countries in the region in a very transparent way so that they understand the steps that we are taking and they understand what our strategic intent is. I think the region understands that.

LANE: The subs program has an eye-watering price tag of up to $368 billion over ten years- sorry, 30 years. More immediately, it will cost $9 billion over the four year budget cycle. You've already offset $6 billion of that. Have you made a decision on what else will be cut?

MARLES: Part of that, as you've described, is the existing allocation for the cancelled Attack class submarine program. But there is an additional $3 billion where Defence is finding savings. But we are looking at 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. So we believe that we can do this in a way which is budget neutral for Defence over the Forward Estimates. Beyond that, it's a different story. I mean, we do live in an environment where we're going to need to increase the Defence Budget and we've been very upfront about that. But I think it's an important statement as we embark on this journey with this program, that Defence is willing to play its part in making sure that all of this is affordable.

LANE: Does that mean, then, that things like tanks perhaps aren't as useful as they might have been? Or that Hunter class frigates, for example, given that you're getting all these submarines, you may not need those things. Will we see those sorts of decisions outlined in the Defence Strategic Review next month?

MARLES: Well, I'm not going to speculate about specific platforms, but the Defence Strategic Review has looked at the Integrated Investment Plan, which is the ten year schedule of procurement for Defence to look at what procurements we have and the extent to which they contribute to the strategic posture that we need to maintain. And we'll talk then through the Integrated Investment Plan as to what we need more of and what we don't need as much of. And that's exactly the kind of judgments we need to make.

LANE: You've said you need to be upfront with the public. How upfront will you be in explaining what programs need to be cut outside of Defence, or, in fact, tax increases are needed to fund this submarine program?

MARLES: I mean, the Treasurer, the Prime Minister, obviously myself, have been making clear that over the medium to long-term, we will need to increase the Defence Budget. The Treasurer has been at pains to describe the growth in Defence as being one of the pressures that need to be accommodated within the Budget, and accordingly, we're making decisions.

LANE: The public has heard that message, but also there's an appetite to understand what the opportunity cost is, what is not going to be funded. The Opposition, for example, has said it's ready to help the Government make Budget decisions to help pay for this. It's said that it's already willing to help to make the national disability scheme more sustainable. Will the Government take up that offer?

MARLES: Well, again, I'm not about to embark now in a conversation about all the decisions that will be made in respect of the Budget in May, but we've been making really clear that a growing Defence spend over the medium to long-term forms part of the thinking that we are going through in terms of how we construct the Budget over the medium to long term and we've been very open about that and how we therefore need to apply fiscal discipline more broadly.

LANE: Sure, but being clear, that means some other programs are going to be chopped and potentially, maybe, tax increases in the future to help pay for this?

MARLES: Well, Sabra, I'm just not going to walk down a path that's speculating about a Budget which will have its own proper announcement process as we hand down the Budget on the second Tuesday in May. Defence will cover itself, as it were, in terms of the existing funding envelope over the course of the Forward Estimates. I think that's more than what people expected, and it is an important statement about the willingness of Defence to play its part in making this affordable. We're not hiding from the fact that submarines is a significant expense. It obviously is. But across the life of the program, we're talking about an expense which is about 0.15% of GDP against the Defence budget, which right now is at 2% of GDP and projected to grow at 2.2% of GDP. So people can see where this fits into a broader Defence spend and in terms of what this does in completely transforming the capability and the potency of the Defence Force, I think this is probably the best value for money, 0.15% of GDP spend, in respect of Defence that we're making.

LANE: Richard Marles, thanks for joining AM this morning.

MARLES: Thanks Sabra.

ENDS