20 March 2023
KARL STEFANOVIC: That is a good look, Timmy. Thank you so much.
Well, a new ad campaign will be hitting your TV screens to entice Aussies to join the Navy off the back of the historic AUKUS submarine deal.
SPEAKER: You can say a lot about life at sea. But the stories worth telling aren’t always the biggest.
KARL STEFANOVIC: The flashy campaign comes as questions are raised over the cost of nuclear‑powered submarines, with the Productivity Commission finding Australia should reconsider building its own defence equipment.
Minister for Veterans’ Affairs and Defence Personnel, Matt Keogh, joins us now from Canberra. Minister, good morning, to you. What do you think about what the Productivity Commission is saying?
MATT KEOGH, MINSTER FOR DEFENCE PERSONNEL: Good morning, Karl. Well, I think what the Productivity Commission has identified is that, yes, Defence has had a lot of trouble with its procurement and a lot of that has been because the previous government put a cap on how many people it could employ, and, I mean, it outsourced a lot of its work with when it came to project management. But when it comes to acquiring such great capabilities like a submarine, it’s not just about the build; it’s also about how do we sustain and maintain that equipment, and when you don’t build that equipment here, it’s very hard to then generate the sort of capability you need to be able to look after that equipment for the decades and decades that you need it to last.
KARL STEFANOVIC: Bit early for a recruitment campaign, isn’t it, given that they’ll be launched in 2040? I mean, are these kids even born yet.
MINSTER FOR DEFENCE PERSONNEL: Well, what’s important actually is that we start building up for that now and we have already started some of that work, because it’s not just about the SSN AUKUS that we’ll acquire in the early 2040s, but we’ll be operating our own Virginia‑class submarines from the early 2030s, and even before that we need to train our workforce and that means having them placed with US and UK submarines, having our submariners go and train in the US and the UK as well. We need to grow that force. The submarines we’ll running from 2030s are quite a lot bigger than the submarines that we have now, so we need to significantly expand our submarine workforce, as well as the workforce across Navy and the Defence Force.
KARL STEFANOVIC: I noted with interest yesterday that the Defence Minister can’t break down the individual costs of the subs. Can you do that this morning?
MINSTER FOR DEFENCE PERSONNEL: Well, see, the thing about the cost of this program is it’s not just about each individual submarine; it’s building the plant and equipment to be able to build these submarines in South Australia; it’s the expansion to our ports in Western Australia that will be involved; it is the training up of personnel not just in the Defence Force, but across industry to be able to support.
KARL STEFANOVIC: Can you give us –
MINSTER FOR DEFENCE PERSONNEL: So you can’t look at it as a –
KARL STEFANOVIC: I understand –
MINSTER FOR DEFENCE PERSONNEL: Well, they don’t run it down into the per submarine cost.
KARL STEFANOVIC: But can you give us the costs on the things you just mentioned then?
MINSTER FOR DEFENCE PERSONNEL: So, for example, in Western Australia, we are going to be expending $8 billion over the next decade when it comes to upgrades to Fleet Base West and being able to support the forward rotation of submarines from the US and the UK, as well as then our own sovereign fleet of Virginia‑class from the early 2030s. So, that’s one figure for one component. But you’ll see that builds up. There’s also the money that will be spent on building the works in South Australia to produce these submarines. And, of course, as you build a submarine, the costs associated with each particular boat reduce over time as you get more efficient at the work that you’re doing, and you build that supply chain up. So, you can’t really work down to a particular per boat cost when you’re building in workforce costs as well as the development that needs to occur before you start building the submarines.
KARL STEFANOVIC: So you can’t give me the costs on one sub?
MINSTER FOR DEFENCE PERSONNEL: Yes, it’s just not the way that you break down those costs, Karl.
KARL STEFANOVIC: But how do you even assess it. I mean –
MINSTER FOR DEFENCE PERSONNEL: What we’ve done, and that’s why we’ve been really transparent, much more transparent than any Government has been in the past when you look at what this full program of development will cost over the range of the submarine fleet that we’re developing through this AUKUS program, and we’re being clear with it.
KARL STEFANOVIC: So, how can you put a cap on it then? How can you say it’s going to be this amount when you have no idea yourself?
MINSTER FOR DEFENCE PERSONNEL: Well, that’s we have done and that’s what we have articulated as being a more accurate figure is to look at it as a proportion of GDP. It’s how defence spending around the world is largely looked at, and we’ve identified that this will be on average over the life of the program about 0.15 per cent of GDP, bearing in mind that that’s coming out of just over two per cent of GDP being the entire Defence Budget. So this is only, less than 10 per cent of the entire Defence spend each year on average, and I think that’s important to put it into that context.
KARL STEFANOVIC: It’s just weird – it’s just strange. I mean, you must realise that it’s kind of weird that you’re buying subs and you just don’t know how much they’re going to cost individually.
MINSTER FOR DEFENCE PERSONNEL: Well, because that’s just not the way that you group up those costs, Karl.
KARL STEFANOVIC: Okay. Good to talk to you this morning. Appreciate it. Thanks for being on.
MINSTER FOR DEFENCE PERSONNEL: Great to be with you, Karl.