Radio Interview, ABC Radio National Drive

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The Hon Pat Conroy MP

Minister for Defence Industry

Minister for International Development and the Pacific

Media contact

media@defence.gov.au

(02) 6277 7840

General enquiries

minister.conroy@dfat.gov.au

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27 July 2023

SUBJECTS: Contract with South Korean defence company Hanwha; Solomon Islands security.

ANDY PARK: Well, on the 70th anniversary of the Korean War armistice, a South Korean defence contractor has been awarded a multi‑billion dollar contract to supply Australia with a fleet of new infantry fighting vehicles. South Korea's Hanwha has beaten Germany's Rheinmetall for the $6 billion contract, one of the largest contracts in the history of the Australian Army. Joining me now from the Parliament House studio in Canberra, Minister for Defence Industry, Pat Conroy. Minister, welcome to you.

MINISTER FOR DEFENCE INDUSTRY: Good evening.

ANDY PARK: How have you picked Korea's Redback model over the German Lynx?

MINISTER FOR DEFENCE INDUSTRY: This was based on the strong recommendation of the Department of Defence who conducted two years of testing and evaluation of both options, using Australian soldiers, and their recommendation was that the Hanwha Redback vehicle best met our requirements.

ANDY PARK: Is it true that the German vehicle made several testers ill, due to a fundamental vibration issue?

MINISTER FOR DEFENCE INDUSTRY: Oh, look, I'm not going to get into the details of the tests and evaluation. I respect the, sort of, confidential nature of ‑ of that process. All I can say is that Defence recommended the Redback as the vehicle that was ‑ best fit our requirements and there was compelling value‑for‑money recommendations along those lines.

ANDY PARK: Has the awarding of this contract, one of the largest in the history of the Australian Army, got anything to do with these vehicles being built and Hanwha's factory in the electorate of Defence Minister, Mr Marles, in Geelong?

MINISTER FOR DEFENCE INDUSTRY: Absolutely not, and the Deputy Prime Minister recused himself from this process to avoid a perception of a conflict of interest. This was based on ‑ the decision was based on what vehicle best fit our requirements, as well as the opportunities for local production which added significant employment benefits. Over around 600 people will be employed directly working for Hanwha, and another thousand through their supply chain throughout the country, and a hundred Australian companies will be involved. So this is giving the best possible capability to the Australian Army as well as delivering hundreds of manufacturing jobs for Aussie workers.

ANDY PARK: So just confirming, the jobs aspects to this awarding of this contract was a metric of its ‑ of its awarding, if you like? 

MINISTER FOR DEFENCE INDUSTRY: No, no. The ‑ the choice of down select, so choosing the Hanwha Redback infantry fighting vehicle, was based on the assessment from Defence about which vehicle best met our requirements. There ‑ there were added economic benefits, obviously, of a local build but they were two separate decisions.

ANDY PARK: So where does this leave Australia's in‑principle agreement with Germany to export more than 100 Boxer heavy weapon carrier vehicles?

MINISTER FOR DEFENCE INDUSTRY: Well, we're still hopeful that that will eventuate. Again, it's a separate process, and both us and the German Government have made it very clear that they are separate projects. The Rheinmetall facility in Brisbane has got significant orders from the Australian Defence Force. They'll be building combat reconnaissance vehicles to the end of 2027. They've got contracts to integrate and sustain three‑and‑a‑half thousand Army trucks into the 2030s, and the first naval contract ever received in Australia was announced by me earlier this year. So there's a strong order book to the Rheinmetall facility and we think that it makes a ton of sense for those Boxer vehicles to be exported to Germany. But, ultimately, we'll just see how ‑ where that leads.

ANDY PARK: Is this ‑ or is there a chance that this decision could jeopardise the EU Free ‑ Free Trade Agreement?

MINISTER FOR DEFENCE INDUSTRY: Oh, I'm not going to speculate on, sort, of the motivations of other parties and other processes. We've chosen the vehicle that was recommended as the best for the Australian Army, and that's driven this decision. The Albanese Government is committed to giving the Australian Defence Force the best possible equipment in a time when our strategic circumstances are the most uncertain, and that's what's driven this decision.  And that's what should drive decisions by government: what is the best equipment for our soldiers, sailors and air crews? 

ANDY PARK: Earlier this year, Labor's Defence Strategic Review reduced the scope of the project from around the original 450 infantry fighting vehicles to just 129. Have you left the door open to build more?

MINISTER FOR DEFENCE INDUSTRY: The recommendation from the Defence Strategic Review was all about modernising the Australian Army and making it fit for littoral movement, so movement around the interaction of land and sea. And so they recommended reducing the number but bringing them forward. So we will start delivering these vehicles early in 2027 and the entire production run will be finished before the last government would have started building a single one, and using the funds freed up to build landing craft to transport them, and invest in long‑range strikes, so missiles and rockets for the Australian Army.

So it's very important to see all three projects as being interconnected and delivered at roughly the same time. Obviously, having a local prodlateraluction facility gives strategic flexibility to future governments to make decisions. That's obviously one of the compelling strategic arguments for local manufacture. But that's not the plan here. The contract ‑ the down select I announced today, worth between five and seven billion dollars, was for the construction of 129 infantry fighting vehicles in Australia at Geelong between '27 and 2028.

ANDY PARK: Just on another matter. You're also Australia's Minister to the Pacific and you were in the Solomon Islands recently. Are you concerned about Solomon Islands security deals with China, and did you express this to Prime Minister Manasseh Sogavare?

MINISTER FOR DEFENCE INDUSTRY: Oh, we've made it very clear a couple of points around those MOUs that were signed. One, we think it's in the interests of both Australia and Solomon Islands and the broader Pacific for there to be transparency and for those agreements to be made public so people can understand what's in them. And we were reassured by statements by Prime Minister Sogavare and others that Australia remains the primary security partner for the Solomon Islands. That's a position that we ‑ we are privileged to hold and they will ‑

ANDY PARK: Do you agree ‑

MINISTER FOR DEFENCE INDUSTRY: ‑ come

ANDY PARK: Do you agree ‑

MINISTER FOR DEFENCE INDUSTRY: and that they will come to us if they have any security gaps.

ANDY PARK: Sure, but US Secretary of State, Antony Blinken, recently called China's behaviour in the Pacific "problematic" during that visit to Tonga. Would you agree with the US Secretary of State?

MINISTER FOR DEFENCE INDUSTRY: Oh, well, we've been very frank that there's geopolitical competition going on in the Pacific, and it's ultimately up to the Pacific how we respond to that. All the leaders of the Pacific Island Forum countries, including Australia, resolved last year that there are gaps in security that people should come to the Pacific family first and Australia stands ready to ‑ to be that partner. And we've also been very clear that we think there should be transparency in any agreements that are being reached so that everyone understands what's occurring.

ANDY PARK: Minister for Defence Industry and the Pacific, Pat Conroy. Appreciate your time. Thank you.

MINISTER FOR DEFENCE INDUSTRY: Thank you. Have a good afternoon.

ENDS

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