Interview with Greg Jennett, ABC TV Afternoon Agenda

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The Hon Pat Conroy MP

Minister for Defence Industry

Minister for International Development and the Pacific

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Peta Donald - 0435 521 326

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28 July 2023

SUBJECTS: Infantry fighting vehicles for the Australian Army, partnership with Solomon Islands, AUSMIN 2023.

GREG JENNETT: Pat Conroy, welcome back to the Afternoon Briefing studio. Very quick one about the Hanwha Redback decision today. Is there any significance to the fact that it was announced on the 70th anniversary of the Korean War armistice? Was that deliberate?

MINISTER FOR DEFENCE INDUSTRY PAT CONROY: It wasn't deliberate, it's purely accidental. It's a function of my travel, I was in the Solomon Islands yesterday and the day before. But obviously there's a symmetry there.

GREG JENNETT: Of course there is. Now, let's go to some details around it. What portion of the Redback fleet will be Australian content?

MINISTER CONROY: Well, I'm really pleased because this investment, besides giving the Australian Army the absolute best capability in the world around infantry fighting vehicles, will deliver around 60 per cent local content. So, $6 in $10 of this very significant contract, one of the biggest in the Australian history, history of the Australian Army, will be spent locally. So, that will drive 600 direct jobs in Hanwha, most of them in Geelong, and then 1000 in their supply chain and involving 100 Australian companies. So, it's a great day for Aussie manufacturing.

GREG JENNETT: And how far advanced are they, working with local component makers to design and or begin manufacture before 2027, of this 60 per cent?

MINISTER CONROY: Well, they've already identified those hundred companies were part of the tender documents provided. And I know they've partnered with – for example, with some very significant contractors in Tasmania, for example, in western Sydney, in Brisbane. So, this is an opportunity for a huge supply chain, building one of the most advanced pieces of army equipment in the world.

GREG JENNETT: You say it represented the best value for money, particularly, obviously, compared to the German Rheinmetall alternative. Does that mean it was the cheapest?

MINISTER CONROY: What I can say is that after two years of testing and evaluation, Defence recommended that the Redback vehicle best fit the needs of the Australian Army. So, the tender assessment of the actual platform drove the decision. And then there was compelling strategic and economic benefits from a local build. And that's why it represented best value for money.

GREG JENNETT: Because you've truncated the delivery time here - you've squeezed it into two years - it seems like the tooling-up costs must be very large to tap out mathematically, on average, two vehicles a month for about two years. But then what for Hanwha, if it's all over in a couple of years?

MINISTER CONROY: Well, importantly, this is using a facility that's been constructed for the contract to provide self-propelled howitzers. So, this is an expansion of a facility that's already been built. Importantly, Hanwha have made it very clear to us they see very significant export opportunities out of this project. They intend to make their Australian base at Geelong the sort of Redback capital for the world. And if they're successful in other tenders around the world for infantry fighting vehicles, they've been quite optimistic with me that they see an opportunity to manufacture parts or vehicles in Australia. And the importance of having a local manufacturer is it gives strategic flexibility for future governments, should the strategic circumstances dictate that, to possibly add more orders if that's what they want to do. That's not our decision. But that -

GREG JENNETT: Well, it would be odd for you to do that because you're the government that just shrank the order sheet.

MINISTER CONROY: Well, the Defence Strategic Review recommended a reduction in numbers to free up funds to deliver landing craft to transport them, and missiles and rockets for the Australian Army. So, that's the right fit for where we are with our current strategic circumstances. But onshore construction gives governments strategic flexibility.

GREG JENNETT: All right, quick final footnote on this. And it is somewhat trivial, I will acknowledge. I take it the company will be required to meet national security obligations. You can confirm that for you - for us. But against that backdrop, does it cause you any concern that Hanwha inadvertently leaked communications points to the media today, including that it would be celebrating with, quote, "Champagne in the kitchen and later rewarding staff with Driza-Bones"? Does that cause you any concern - the action of leaking it or, for that matter, the spending of money on those?

MINISTER CONROY: Well, I'm happy they're celebrating a very significant contract. That's understandable. I'm not aware of that event. Every single Australian defence company is required to follow very rigorous security procedures. It's very important that they do because this is data that's critical to our national defence, and we've got very good systems in place. But this is a great day for the Australian Army. It's a great day for Australian manufacturing. It will give our defence force the best possible capability. Another investment by the Albanese Labor Government, growing 600 direct manufacturing jobs at the same time.

GREG JENNETT: Yep, all right. Now, you've already noted in this conversation, Pat Conroy, that you've had a bit of travel and you still have some ahead of you. You were in Honiara only a day or so ago, you met Prime Minister Sogavare. Did he discuss further with you the proposal that he did discuss with Richard Marles - standing up a Solomon Islands army or a Solomon Islands defence force? Was that further progressed?

MINISTER CONROY: Well, I don't generally publish what my discussions are with Ministers and Prime Ministers, but we've been very clear that if the Solomon Islands would like to develop a defence force, we stand ready to assist with it. We're proud to be the Solomon Islands' primary security partner, and that means where there are gaps in their security, we fill them.

GREG JENNETT: What with? What do you envisage? I know you're limited, somewhat, in what you can scope out here publicly, but you must have some concept. What would that assistance look like?

MINISTER CONROY: Well, it's very early days. Training and equipment are the two principal ones that we provide, and we already have extensive security support for both the Solomon Islands. We provide two Guardian Class patrol boats for the maritime security and we support a lot of the Royal Solomon Islands Police Force.

GREG JENNETT: This would be a step change on both of those I would say.

MINISTER CONROY: It would, to help generate a defence force. But we stand ready. We're proud to be their primary security partner and that means if there's gaps in their security, they've said they'll come to us first and then we'll fill them. We support the PNG Defence Force quite significantly. We support the Fiji Defence Force. They're really important relationships in the region and we intend to elevate them where we can.

GREG JENNETT: All right, now, US Secretaries are circling Australia in the region at the moment. Tony Blinken in New Zealand today, Lloyd Austin just about now leaving Papua New Guinea. There'll be lots of discussions around AUKUS at AUSMIN. If necessary, to satisfy Republican Senators in Washington DC, would Australia be open to increasing its contribution to the US industrial base so that three - up to three Virginia Class nuclear submarines can be on passed or on sold to Australia?

MINISTER CONROY: Well, I think that particular Republican Senator was calling for more investment from the Biden Administration. And I'd make the point that they're allocating significant resources, a lot of resources, in fact, to increase production of Virginia Class nuclear-powered submarines and to improve sustainment performance. And we're investing some money because it's -

GREG JENNETT: Around $3 billion.

MINISTER CONROY: Yeah, around $3 billion, because it's realistic. We can't expect the US to transfer submarines to us if they don't have submarines available, but we're confident we'll get there. I visited the Electric Boat submarine construction yard in Connecticut and they're making progress in increasing the rate of construction and I'm sure we'll get there.

GREG JENNETT: So, you don't think any organ within the US government's structures would shake Australia down for more in order to clear some of those political obstacles?

MINISTER CONROY: When I was visiting US Congress in June, there was strong and universal support across the aisle for the AUKUS arrangements and the compelling strategic reasons for why Australia should acquire nuclear-powered submarines. It adds to the deterrence effect in the Indo-Pacific and they all recognise that. At the same time, they're very focused on increasing production of Virginia Class. No one has raised with me increased Australian investment and I'm very confident that the critical pieces of legislation will get through the US system this year.

GREG JENNETT: All right, well, you've landed one significant defence contract track today. That particular one is an ongoing piece of work. Pat Conroy, we'll let you get on your way. Busy times.

MINISTER CONROY: Thanks. Have a great afternoon.

ENDS

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