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The Hon Richard Marles MP

Deputy Prime Minister

Minister for Defence

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02 6277 7800

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28 April 2023

SUBJECTS: Defence Strategic Review.

TOM CONNELL, HOST: Well, while all that went on, we had standing by another interview because we had the Defence Strategic Review, of course, out on Monday. A huge change to our approach, in particular, that threats are no longer on a ten-year horizon, but are coming much faster. Deputy Prime Minister and Defence Minister Richard Marles has been standing by, being patient, although you have to be when you're not so much waiting for us, but the Prime Minister. But do appreciate your time and your patience. One of the big changes, long-range missile capability. This is something that the review says is needed. So how urgent will that be? When will this be able to be actually delivered, this capability?

RICHARD MARLES, DEPUTY PRIME MINISTER: Well, it is a really urgent capability, Tom, and it really goes to what the Defence Strategic Review puts forward as being one of the key issues is enabling Australia to have greater projection and therefore enabling our Defence Force, and particularly our Army, to have greater projection. To give you a sense of that, right now we can throw ordinance out at about a distance of 40 kilometres. What we need to be doing is projecting over hundreds of kilometres. The country has for a while been looking at investing in a guided weapons manufacturing capability in Australia. But the truth is, the former government didn't really put any significant money into that. In answer to your question, there had been an objective of beginning manufacturing in this country in relation to longer range missiles in 2027. We have now more than doubled the funding in relation to that as a result of our response to the DSR, taking our funding up to $2.5 billion. And we hope that means that we will be able to bring that well forward and begin the process of manufacturing within the next couple of years. And in terms of the purchase of actual strike weapons or long-range strike weapons, we've committed more money to doubling the purchase of the HIMARS system that we announced in January. And again, that should see a potent capability beginning in about two years’ time.

CONNELL: Okay, so that capability begins in two years’ time. Earlier, as you said, than scheduled. The Army are pivoting, obviously, to that longer range deterrent we've been speaking about and then taking away from some of the sort of on the ground capability in terms of priorities of spending. Are we essentially banking we'll never have to fight, say, a Ukraine style war on our own land?

MARLES: Well, it is trying to assess what the real strategic threat is. I mean, we maintain a capability to defend Australia. A lot of that defence obviously comes in terms of the maritime approaches that we have. But it is to observe that any adversary who wants to do us harm can do a whole lot of harm to Australia without ever having to set foot upon our shores. And so when we're looking at structuring our Defence Force, we really do need to be building capabilities which can hold an adversary at risk further from our shores. As we sought to retask the Australian Defence Force, we talk in terms of being able to deter through denial any adversary which seeks to project power against Australia through our northern approaches. We talk about being able to protect our economic connection with the world, with our partners being able to provide for the collective security of our region and maintaining the global rules-based order. All of those objectives lie a long way from our shores. And it means that we need to have a much more nimble Army, for example, that is able to move and we need to have longer range strike, and we need to have capabilities which do project which give adversaries pause for thought. Which is why you need a nuclear-powered submarine, for example.

CONNELL: And does that include obviously there's a review coming in terms of the Navy's capability, but does that missile emphasis and longer range emphasis extend to the Navy? We've got at the moment a plan for nine of the Hunter class frigates. They don't have much of a missile capability. So as part of that review, is that review open to say, hey, we might not need any of these, is a potential scrapping of them on the table to shift towards more of a missile capability?

MARLES: I wouldn't want to raise expectations about that. I think it's important that we are having a quick conditions check here, because the Defence Strategic Review makes a couple of really important observations about our surface fleet. One is that the current structure of the surface fleet was really imagined and designed when the country was still looking to purchase a diesel-electric powered submarine. And now that we are acquiring a much more capable submarine and a nuclear-powered submarine, that obviously has implications for the overall shape of the surface fleet. And the second observation that it made is that the way in which navies around the world are going is to look at having a larger number of smaller ships in terms of their major surface combatants. So as we are thinking about what we need over the next few years, but not just that, what we need over the next few decades and that is the length of time that we're thinking about with the Defence Strategic Review, it makes sense to have a conditions check right now to see exactly what are the right numbers going into the 2030s, the 2040s, because that's the current time frame of the build that we're looking at doing.

CONNELL: AUKUS subs, you mentioned there the cost of them. PBO figures out today show that the cost that's got a bit of a breakdown of it. Of course, we know that the price tag is up to $368 billion. That only goes out to 2055, though, at that point we will have built five subs that will have been delivered. So the final three subs seemingly are not included in that price tag. Is that accurate?

MARLES: Well, what we've costed is through to the point where we are operating eight nuclear-powered submarines, which is the fleet size that we are imagining in terms of our nuclear-powered submarines. And we've made the commitment that what we're looking at doing is building a continuous – or developing a continuous submarine building capacity in Adelaide. So, I mean, you could cost this thing out to the year 2100, if you like, but what we've said is that the cost of the program over the journey is about 0.15 per cent of GDP. That's why we've given the number in those terms. You can contextualise that in the sense that we currently are spending 2 per cent of GDP on our defence, with a view to that growing to 2.2 per cent by the end of the decade. We have provided numerical figures out to the point in which we get to having eight nuclear powered submarines, and that's why we've done the costing in that way. But can I just say, Tom, I mean, I've seen the reporting today, this is the most transparent level of information that's being provided by government in respect of a defence acquisition ever. Because we've not just provided information in respect of the acquisition of the submarines, we provide information in relation to the sustainment of them. And we're contextualising the cost over the journey, noting that really what we're doing is building an enduring capability which as intended goes on indefinitely.

CONNELL: And that 2.2 per cent of GDP out to the end of the decade. Is that as high as the figure gets? Is that factoring in what could be a lot of new spending that was outlined on Monday? I mean, what's your best estimate for perhaps what we peak at in terms of defence spend as percentage of GDP?

MARLES: Yeah, it's a good question. It doesn't take into account the Defence Strategic Review, which is why we made the statement on Monday that what we expect is that the amount that we spend on defence will grow beyond the existing trajectory. So we've made clear over the Forward Estimates that we can pursue the six priorities that we identified in our response to the Defence Strategic Review through a reprioritization of money over the course of the next four years –

CONNELL: Which is why the Forwards isn't much. You must have a – sorry to jump in, we’re nearly out of time – you must have a ballpark for where it gets to ultimately. Are we talking three, four? I mean, how big is this going to be as an impost?

MARLES: Well, firstly, the Forwards is significant. A reprioritization of $7.8 billion over the course of the next four years is a huge number and it's a very significant set of decisions over the course of the decade and beyond. What we know is it's going to be more than the existing trajectory and there's obviously a lot more work that needs to be done in relation to putting a number on it, which is what's going to play out as we go forward. But the one thing we can say for sure is that we inherited a current funding trajectory that we committed to this time last year as we led into the last election. We now see that over the course of the next ten years, having done the Defence Strategic Review, that the amount that we'll need to spend over that period will be more than the current trajectory.

CONNELL: All right, we’ll know, I suppose down the track, how much more. Defence Minister Richard Marles, appreciate your time today. Thank you.

MARLES: Thanks, Tom.


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