Press Conference, Parliament House, Canberra

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The Hon Pat Conroy MP

Minister for Defence Industry

Minister for International Development and the Pacific

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media@defence.gov.au

(02) 6277 7840

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minister.conroy@dfat.gov.au

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27 July 2023

SUBJECTS: Announcement of preferred tenderer to supply infantry fighting vehicles for the Australian Army.

MINISTER FOR DEFENCE INDUSTRY PAT CONROY: Well, good morning, everyone. I’m Pat Conroy, the Minister for Defence Industry, and I’m joined by Lieutenant General Simon Stuart, the Chief of the Australian Army.

I’m here today to announce an important next step in transforming and modernising the Australian Army. In response to the Defence Strategic Review the Albanese government is reshaping the army to be able to respond to the strategic challenges our nation faces. The government is delivering three critical new capabilities over the next five years.

These new capabilities are: infantry fighting vehicles to provide soldiers with high-level protection, mobility and firepower; landing craft to provide Army with the ability to manoeuvre in the coastal environments of Australia and the region; and long-range fires in the form of new HIMARS rocket systems; and land-based maritime strike to provide army with the ability to strike over an extended range.

These interlocking capabilities will modernise the Australian Army to operate in a coastal or littoral environment. They will place army at the heart of our strategy of deterrence through denial, and they will enhance army’s ability to defend Australia in the face of contemporary challenges.

Today is another example of how the Albanese government is delivering the capabilities the Australian Defence Force need to defend Australia, and I can announce that after careful consideration the government has selected Hanwha Defence Australia as the preferred tenderer to build 129 infantry fighting vehicles. Critically, the government has also decided that these vehicles will be built in Australia at Geelong rather than purchased overseas.

This is one of the largest projects in the history of the Army. The cost will be subject to detailed negotiations but is expected to be between five and seven billion dollars. This project will deliver 129 Hanwha Redback Infantry Fighting Vehicles. These state-of-the-art armoured vehicles will come with the latest generation armour, cannon and missiles, providing the protection, mobility and fire power needed by soldiers in close combat.

I want to emphasise that the Albanese government is actually delivering on this project – something the former government failed to do. We’re also doing it faster than they planned. We will deliver all 129 vehicles before the former government planned to deliver one. Let me repeat that: we are delivering all 129 vehicles before the former government planned to deliver one, with the first deliveries expected in early 2027 and the final deliveries in late 2028.

We’re also committed to building these vehicles in Australia. This represented the best value for money due to the compelling strategic advantageous and the economic benefits to the nation. To maintain our national security we need to be able to build critical defence capabilities here rather than relying on overseas supply chains. Building the vehicles in Australia will also inject billions of dollars into our local industry and our local economy.

This decision will support thousands of high skilled, well paid jobs not just in Geelong but all around Australia. Hanwha estimate this project will support 500 to 600 direct jobs with Hanwha, the majority in the Geelong region; over 1,000 indirect jobs in Australian defence industry suppliers; and up to 100 Australian companies in the supply chain for the project.

This decision is good for Australia’s defence and security, it’s good for Australian jobs, and it’s good for Australian manufacturing, reflecting the fact that we want to make things here.

Now that Hanwha Defence Australia has been announced as the preferred tenderer we will undertake detailed contractual negotiations in coming months. Following those negotiations the government will make the second pass decision on funding and contractual details at the end of the year.

I’d like to thank both shortlisted tenderers as well as the businesses and their supply chains for their professionalism throughout what has been a long process. Today’s announcement gives our industry partners clarity and certainty about the task ahead. Most importantly, today’s announcement is – also gives the Australian public clarity and certainty that the government is doing what is needed to defend and protect Australia now and into the decades ahead.

I’ll now ask the Chief of Army to make some remarks, then we’ll respond to your questions. And I’m happy to take questions about today’s announcement first and then the Chief of Army will step aside if you’d like to ask questions about other matters. But over to you, Lieutenant General.

CHIEF OF ARMY LIEUTENANT GENERAL SIMON STUART: Thanks very much, Minister. Today’s announcement is a big step forward in army’s ability to deliver on national defence with relevant and credible capability as part of an integrated ADF. Thank you.

MINISTER CONROY: Thank you. Ben.

JOURNALIST: Minister, can you say whether the government will now hold Rheinmetall to its pledge to export up to 100 Boxers back to Germany? Because some say that that deal was contingent on the outcome of this process. And also could you confirm that the Redback vehicle was the best vehicle in testing?

MINISTER CONROY: I can confirm that we regard the Boxer export deal and Land 400 Phase 3 as entirely separate matters and we’re really pleased with the level of engagement we’ve had with the government of Germany and Rheinmetall. And obviously the Prime Minister observed the signing of an in-principle agreement to deliver more than 100 Boxer heavy weapon carriers from Australia to Germany earlier this month. So they are separate matters, and we will continue to engage with the government of Germany on that. We’re very hopeful that that will continue. And we’ve already been discussing this announcement with the German government.

On the other matter, I can state that there was two years of extensive testing and evaluation of both shortlisted tenderers, and it was Defence’s recommendation that the Hanwha Redback vehicle best met Australia’s requirements. It was Defence’s recommendation on that – let me make that very clear – that it best met Australia’s requirements.

JOURNALIST: Minister, what was the reaction from Rheinmetall and the German government when you broke the news to them that they weren’t getting this deal? And, Lieutenant General, could you just explain what the Hanwha vehicle has that the Rheinmetall one doesn’t?

MINISTER CONROY: I generally don’t go into confidential discussions, but it would be understandable that they were disappointed. I should stress that Rheinmetall, particularly at their Military Vehicle Centre of Excellence is an essential partner of the Australian Defence Force and the Australian government. The MILVEHCOE facility is responsible for the integration, sustainment and upgrade of around three and a half thousand ADF medium heavy trucks up to 2030 and beyond, and they’re also delivering the Boxer combat reconnaissance vehicle as well. And as recently as early this year I announced a new contract, the first contract with the Australian Navy, to build multi-ammunition soft kill systems. So Rheinmetall has a strong future in Australia and they’re a great partner of the Australian Defence Force.

I’ll invite the Chief of the Army to respond to your second question.

LIEUTENANT GENERAL STUART: Look, it’s been a multi-year process, very robust, very fair. We’ve had it in the hands of our soldiers for a very significant and longitude in the series of testing. And at the end of the day our recommendation to government was that the Redback best met the full set of requirements to deliver a relevant and credible combined arms fighting system.

JOURNALIST: Minister, are you concerned that this may affect Australia’s ability to finalise the Free Trade Agreement with the European Union, given that we’d sort of, as we saw a couple of weeks ago with the PM visiting Berlin, we’d sort of made a lot of efforts to cultivate ties with Germany as sort of like a champion for Australia in Europe? And, secondly, what sort of message do you think this sends to European defence companies when we’ve rejected Rheinmetall on this contract, we’ve kicked out Airbus with the helicopters, with the army helicopters, and the previous government obviously cancelled the French submarine contract. Do you think European defence companies have any confidence at all in negotiating with the Australian government on defence deals?

MINISTER CONROY: I think defence companies around the world can be confident that the Australian government will act in the best interests of the Australian people to deliver the best equipment for the Australian Defence Force. And as the Chief of the Army stated, after two years of very extensive testing and evaluation by Australian soldiers, the Redback was found to be the best option for the Australian Army. And the Australian government makes no apologies for that.

We’ve got a very strong relationship with Europe and we’ve got a very strong relationship with European defence companies. As I said, Rheinmetall is integrating sustaining three and a half thousand army vehicles right now. They’re delivering the Boxer combat reconnaissance vehicle. I announced a new contract, their first ever, with the Australian Navy. We’re very happy to do business with European defence companies, and they’ve got a strong future in this country. This was a normal tender process where, unfortunately, you have to choose one option, and this is the one we chose.

JOURNALIST: And the …?

MINISTER CONROY: I’m not going to speculate on matters outside my portfolio. I think – but what I would like to think - is that all countries accept that there are normal competitive processes in tenders. That occurs for Australian companies tendering overseas equally.

JOURNALIST: A question for the Chief: there was widespread disappointment in Army when the numbers were reduced for IFVs and for Howitzers. Can you see a point where the Army may need to increase the number of IFVs in the near future and make that recommendation to government? And secondly, can you give us an update on the battle management system, given army is still using an interim system a year on?

LIEUTENANT GENERAL STUART: To your first question, Andrew: we’re focused on delivering a relevant and credible capability as part of the integrated force that the National Defence – the Defence Strategic Review has directed us to do. It’s important to note that this isn’t a like-for-like replacement; we’re replacing a 1960s technology with a 21st-century technology. So it can do a whole lot more. It better protects our people, importantly. It is more lethal; it is certainly far more connected and has a much greater range and sphere of influence if you like.

It's also part of a broader team, and this is the final piece in the puzzle for that combined arms-fighting system. So we’re very focused on delivering the best capability we can with what we have. I also note that every part of our Army that has soldiers involved in the system, so crewed systems, increasingly part of a human-machine team, which means that we can scale both mass and effect.

JOURNALIST: And on BMS?

LIEUTENANT GENERAL STUART: And on BMS, we are working now with the first part of the next phase of that program, and that will be able to best leverage the very significant C-4 capabilities that modern equipment, vehicles and weapons systems provide.

MINISTER CONROY: And if I can just – I just want to add one point to that question, Andrew, before I go to the next one, which is that we need to see this decision – which is a very important and good day for the Australian Army – in the context of the Defence Strategic Review’s recommendations. This is about modernising the Australian Army, equipping it for littoral manoeuvre and long-range strike. So this announcement importantly brings forward this capability. That was a bit lost in the sort of discussions around the DSR – that they actually recommended bringing forward Land 400 Phase 3, the infantry fighting vehicles.

We will be beginning delivery of these vehicles in early 2027 with the final vehicles to be delivered in late ’28. That is bringing it forward by a number of years compared to what the last government’s plan was. Importantly, that delivery will coincide with the implementation – the delivery of landing craft, including more landing craft medium and landing craft heavy, and a very significant investment in long-range strike, both the HIMARS rocket system and land-based maritime strike. So that the Australian Army’s longest-range weapon will go from roughly 40 kilometres to 300 kilometres then over 500 kilometres.

So as the Chief of the Army said, this is the final piece in the combined arms combat system, but also, importantly, it’s about delivering on what the Defence Strategic Review has recommended to this government, and the Albanese government is investing in the defence of this nation.

JOURNALIST: Minister Conroy, can you confirm at all whether there was a vibration issue with the Rheinmetall vehicle and that may have caused some soldiers to be ill during the tests? And also to the Chief of the Army, will the Army scale up its presence in Victoria at all given these vehicles are being manufactured there?

MINISTER CONROY: I won’t go into the detailed findings of the test and evaluation; it all remains commercial in confidence, and it’s very important that the Australian government respects that confidentiality. I’ll just state a couple of principles: one, that both options were the subject of two years of extensive test and evaluation and they end of that process the strong and clear recommendation from the Department of Defence, including the Army testers, was that the Hanwha Redback infantry fighting vehicle best met Australia’s requirements. They’re two simple facts, and I’ll just leave it there.

Anyone else who hasn’t had a go yet?

JOURNALIST: Just on the question I had for the Chief of Army in regards to Victoria?

LIEUTENANT GENERAL STUART: Thanks for the question. We’re looking now at where we are going to be located in the future. I think it’s fair to say that the direction is to ensure that as part of the ADF we have a bias toward the north of Australia and a bias toward ensuring that we can generate joint capability – air, land, sea, cyber and space – from an increasingly common set of bases.

MINISTER CONROY: Anyone else before I go back to Ben for a second go?

JOURNALIST: So just on the politics of this, the Hanwha factory is in Richard Marles’s electorate. I know he excused himself from the process, but he’s obviously part of cabinet. So – and there’s also potential backlash in Queensland where Labor is not as strong. So if I could just get you to comment on the politics of it. And also to the Chief, 129 is a lot fewer vehicles than you had originally expected. There are a whole lot of consequential changes in terms of the structure of the army. Where are you at on that process and where are you going to end up?

MINISTER CONROY: Thanks, Ben, for that question. This decision was made purely and solely on the capability of the vehicles offered and value for money. That’s all that was required – that was considered in this deliberation. And as you stated in your question, the Deputy Prime Minister recused himself from this process completely. He was not part of any stage of the decision-making for this. And that’s very clear, and he did that voluntarily based on a perception of a conflict of interest.

This is the right vehicle for Australia. It is a leap forward, a massive leap forward, in capability for the Australian Army. As the Chief said, it’s the final platform in the combined arms force, and it was the right decision. I understand there’s disappointment with the tenderer who wasn’t successful, and I respect that and I appreciate that. But there is – I’ve been up to MILVEHCOE and there’s a tonne of work going on there right now. And we’re very excited by what they’re doing for the logistics vehicles, for the Boxer combat reconnaissance vehicle, for the multi-ammunition soft kill system for the Australian Navy. And obviously, we’re pursuing the export deal with Germany for the Boxer heavy weapon carriers.

So I understand that disappointment, but this is a decision based on the stronger possible recommendation from defence and the strongest possible benefit for the Australian Defence Force.

LIEUTENANT GENERAL STUART: You’re right; we do need to change the way that we organise and the way that we train in order to best use the significant investment in our army. And we’re working through that now. On the 1st of July, we made the first set of changes at the army headquarters at the division level that allows us to better generate operational capability. And we’re now working through what that means at the next level in terms of the design and disposition of the capabilities we have at the brigade and unit level. It’s my aim to have that work completed and to present options by August of this year.

MINISTER CONROY: And we’ll make this the last question, Andrew.

JOURNALIST: Just on the fact that we’ve done a deal with the South Koreans, we’ve spoken for years about having a stronger defence relationship with them. As you know, there’s been past decisions where the South Koreans have been given the rough end of the stick on things. This is the biggest deal we’ve done with an Asian defence company. We’d be looking at [indistinct] as a major strategic partner in a region of uncertainty. Can you just talk about what this will mean for relations between Australia and South Korea, particularly at this time of tensions?

MINISTER CONROY: Well, I think it has the potential to deepen our relationship with the Republic of Korea, and that’s a good thing and it’s something that we’re keen to do, just as we’re very keen and have been deepening our relationship with Germany. Both are very important strategic partners for Australia. Both are partners that we’ve had long histories with that we want to deepen and extend. And this will assist in that.

Hanwha have indicated that they see significant export potential from the facility in Geelong should other nations select the Redback as well. That was not a factor in this decision – I should emphasise that – but they see it as a great second source for their production facilities off the Korean Peninsula, and that’s part of the industrial strategy of the Republic of Korea, to look at second-source options.

So this will deepen our relationship with the Republic of Korea. I’m hopeful of that. Again, I should stress that was not a factor in this decision. This decision was made purely on the vehicle offered and the value for money determination. Both countries where those companies are home-based we have excellent relationships with, and we intend to have excellent relationships with both of them going forward.

Thank you again, everyone.

ENDS

 

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