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The Hon Pat Conroy MP
Minister for Defence Industry
Minister for International Development and the Pacific
28 April 2023
Subjects: Advanced Strategic Capabilities Accelerator, strategic environment, Defence acquisition, autonomous platforms, spending on defence innovation, creating Australian jobs, contingency costings, consultancy fees
ANDY PARK: Well, around three and a half billion dollars will be spent over the next ten years to reshape defence innovation in Australia. The commitment boosts funding by around $600 million above the planned innovation spending and will go towards the Advanced Strategic Capabilities Accelerator. The new scheme will be designed to fast track new war fighting technologies.
Pat Conroy, the Minister for Defence Industry and the Minister for International Development and the Pacific, joins me here in the RN Drive studio. Minister, welcome to you.
MINISTER FOR DEFENCE INDUSTRY, PAT CONROY: Good afternoon.
PARK: What is Defence going to get out of this accelerator? I mean, what are the priorities for this program?
CONROY: Well, this program is a critical part of the Defence Strategic Review that we launched on Monday, which really talked about our deteriorating strategic circumstances and the need to give the Australian Defence Force the ability to deter any potential adversary. So, the Advanced Strategic Capabilities Accelerator is all about developing technology in Australia that can give the Australian Defence Force a capability edge in the battlefield in the years to come. Importantly, by developing it here and linking it into projects, will also grow new advanced technology companies in Australia, which leads to more jobs for Australians.
PARK: One of the things that was in the Strategic Review and you repeated in your statement today was a very curious sentence. You said that Australia has lost the ten year warning time. That sounds very, very ominous. What do you mean by that?
CONROY: This was actually first announced by the last government in the 2020 Defence Strategic Update. Our main criticism is they agreed with it, but they didn't do anything about it. They didn't speed up Defence acquisition or change Defence procurement practises. What that means is since effectively World War II, the end of World War II, and especially made concrete by the Paul Dibb review of the 1980s, Defence planning was based on the fact that we would get a ten year warning time for a major regional conflict. That we would be able to tell ten years out that a potential adversary in the Indo Pacific was building up their military, such that they could challenge Australia. And that was accurate at the time, Paul Dibb said we faced very benign strategic circumstances then. Now we don't. We see the greatest build-up of militaries in our region since World War II.
PARK: Particularly China.
CONROY: Particularly China, and we see that strategic uncertainty, meaning that that ten year warning horizon has disappeared. And what does that mean? That means that the Australian Defence Force needs to get equipment sooner than they would otherwise. We can't rely on a ten year warning cycle, which means Defence acquisition has to improve, we have to get equipment faster and we have to make sure we spend our limited funds on the best possible equipment, to give our troops a capability edge.
PARK: So, this best possible equipment or technology, some of these are fairly technical for the uninitiated. Can you just explain in simple terms what they're going to be used for and how they'll help the ADF?
CONROY: Well, one of the ones we're looking at today was autonomous weapons platforms. If you can think about a mini tank with a weapon stationed on top, it could be a machine gun, it could be an anti-tank missile. So, instead of having Australian troops at the edge of the battlefield, having to fire the machine gun, you would have these small tank-like vehicles that were being operated remotely. That gives us an advantage because we're never going to have an army with millions of people in it. So, we need to use technology and we also need to use technology to protect our troops more effectively. So, that was one of the pieces of equipment we saw today. Nearby, testing is going on with what's called Ghost Shark, which is a large autonomous underwater vessel. Think of it as an autonomous submarine that could complement what we're doing with our nuclear propelled submarines and our surface fleet. So, this is all about recognising we're a small nation, we've got limited funding. So we need to invest in equipment that magnifies our size, magnifies our punch.
PARK: It's an additional $591 million being invested into this accelerator, taking the package to more than $3 billion. I mean, let's just focus on that for a moment, that's a staggering amount of money. Is it a valid amount of money, do you think?
CONROY: Well, that's over the decade. So, $3.4 billion over the decade, and this is the most significant investment and change in Defence innovation policy in decades. It should be put in context, we spend around 3% of our Defence budget on Defence innovation. The United Kingdom spends 7% of theirs and the United States 13%. So, this is a step up and it's a necessary step up to give us a technical advantage. This is really critical and it's also good for jobs, because we want to see more home-grown technology here, being developed here, leading into new capabilities for the Australian Defence Force and new jobs and new industries of the future, especially in manufacturing.
PARK: So, does that mean that the old Defence innovation model, focusing largely on land based vehicles, was an incorrect or inappropriate strategy?
CONROY: Well, the main issues I had with the old Defence innovation model, besides the fact that we're giving more resources, so resources is one thing we've changed, is that it wasn't focused on capabilities that the Australian Defence Force could use or see themselves using in a few years’ time. It effectively sprayed the money far and wide on good ideas, and that's important, but it meant that if a technology was proved up, there wasn't an acquisition program that would then develop that technology into service. And that meant those technologies were being forced to go overseas. So, the big thing with this accelerator is that we will only be supporting technology that the Australian Defence Force says I can see this being used by our troops in theatre in five or seven years’ time. That means that we're much more focused with our limited dollars. And secondly, it means that when the technology does get proven up, that there's an acquisition program to fund the commercialisation of it, so that it doesn't get forced to go overseas, we get it into production and working in Australia. At the end of this process, it's all about giving our soldiers, sailors and air people the best possible and most advanced equipment, because we need to be able to deter enemies that have much larger forces than us.
PARK: New and advanced technologies require new and advanced skill sets. We're already struggling with a skills shortage in this country. So, is this a bit of a blindside to this program? Potentially a flaw? Who's going to build this stuff, basically?
CONROY: Well, this is a demand signal to the universities. Richard Marles, the Deputy Prime Minister, and I had a roundtable this morning with innovative small companies and the university sector, and there's lots of work being done in universities already. What they need is funding for that and this is what this $3.4 billion drives. It drives the funding signal so that universities can train more scientists and engineers, and companies can employ them, because we'll be funding that and paying for that. And you're absolutely right, the workforce is the critical capability edge we have, but we have to maintain that.
PARK: If you’ve just joined me on RN Drive, the Federal Minister for Defence Industry, Pat Conroy, is here.
And let's return to the cost, or at least the value for what we're paying. This is a massive sum of money. The $368 billion AUKUS deal makes that look like a drop in the ocean. We've seen today that Defence has provisioned for a separate 50% contingency of $122 billion. What would that actually mean? Because ultimately, it's your children and my children who are going to be listening to this interview in ten years and wondering where all this technology is and why did it cost so much?
CONROY: Yeah, importantly, that $122 billion - up to - is included in that other figure, so it's already included in the cost of the project and it's prudent. If someone's building a high rise building, they'll have a 10% contingency in that to recognise that some things may go wrong with a construction project and they have money left to spare.
PARK: Sure, but the Greens have described this contingency as extraordinary and question whether the cost would eventually blow out to half a trillion dollars. I mean, the Greens essentially say this allowance proves you don't know how you're going to deliver this project. They have a point, though, don't they?
CONROY: No, they don't. The Greens have no credibility in this area, and today's brouhaha demonstrates that. This is prudent, a normal Defence project of lower complexity would have 20% to 25% contingency money.
PARK: Why wasn't that contingency disclosed at the time of the announcement?
CONROY: Sorry, if I can just finish my point. This recognises that we're engaging in one of the most complex endeavours humans do, which is build nuclear propelled submarines. We're doing that to give the Royal Australian Navy the best possible equipment to deter adversaries and support peace and stability in the region. And that 50% contingency is prudent to make sure that we have adequate resources if it runs into trouble.
PARK: If it's so prudent, Minister, why wasn't this disclosed at the time of the announcement? Where's that transparency?
CONROY: Well, it was included in the cost. It was included in the cost. We undertook the most transparent and extensive costing exercise for this that anyone has ever done for a Defence project. Normally, when a Defence project is announced, like buying helicopters, you just announce the cost of the project. We included in that figure and the best figure to use is 0.15 per cent of GDP, because that reflects the level of national effort, which is…
PARK: About half a trillion.
CONROY: Well no, it's the other figure that you've been talking about, $368 billion, as the upper end. We included the cost of acquiring the submarines, of building them. We included the cost of sustaining or maintaining the submarines. We included the cost of equipping them with weapons. We included the cost of building the docks and everything else that's associated with it, and we included the cost of staffing the submarines. And that includes contingency. This is incredible transparency. And for anyone to say you shouldn't have contingency that you should not be prudent and deal with the inevitable risks and challenges just shows how irresponsible and unfit they are to govern.
PARK: Okay. We've also seen retired US Admirals being paid, what, thousands of dollars a day of taxpayer money for consultancy work. Is that going to continue? And would you commit to more transparency around that sort of expenditure in the future?
CONROY: Well, those figures are disclosed from time to time. Some of it is disclosed during the Senate Estimates process. So, I think we've got adequate transparency. We make no apologies for searching the world for the best expertise. If I can talk about one person for example, who's the head of the Naval Shipbuilding Expert Advisory panel. Retired Admiral William Hilarides from the US Navy. He's providing critical advice to make sure that we construct our surface vessels and deliver them as close to as on time as possible. And he provided great service when he was in the US Navy. He played a critical role in helping upgrade the Collins Class, to deliver the most effective and advanced conventional class submarine in the world. So, these people that we engage are world experts and I don't think anyone would begrudge us saying, well, this is a very big project, we're using taxpayer’s money, we should get advice from the best and brightest, not just in Australia, but around the world, to make sure those projects go as smoothly as possible.
PARK: We'll have to leave it there. Minister for Defence Industry and International Development and the Pacific, Pat Conroy. Thanks for your time this afternoon.
CONROY: My pleasure.
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