Doorstop interview, Indo Pacific Sea Power Conference

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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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7 November 2023

SUBJECTS: Indo Pacific Sea Power Conference, AUKUS, independent analysis of Navy’s surface fleet, Defence workforce, Defence budget.

RICHARD MARLES, ACTING PRIME MINISTER: Well it's fantastic to be here at Indo Pac 2023. This is the largest Indo Pac since the establishment of Indo Pac here in Sydney back in the year 2000. It says a lot about the way in AMDA, a great Geelong not-for-profit has organised this event over the years. We've got more than 800 defence industry companies who are present, representatives from more than 40 navies around the world, more than 20 chiefs of navy who are here. And this is happening at a hugely consequential moment in global affairs. Obviously, the tragedy that is unfolding in Gaza does remind us about the fragility of peace. We still see the conflict in Ukraine which is an affront by Russia to the global rules-based order. And we see that order under pressure right around the world and here in the Indo-Pacific. This is also happening at a critically important moment in terms of Australia's defence thinking, in terms of Australia's naval thinking. Obviously this year we announced the means by which Australia would acquire a nuclear-powered submarine capability. Through the course of this year, we've had the surface fleet review, which is now in the hands of government and we're in the process right now of formulating our response to that review, which will come out in the first couple of months of next year. And so, today's expos and today's conference is happening at a really significant moment in our own deliberations. I will hand over to Vice Admiral Hammond.

VICE ADMIRAL MARK HAMMOND, CHIEF OF NAVY: Good morning. It's an absolute privilege to be here hosting Indo Pac 2023 with AMDA, the 13th iteration of this exposition and our own Sea Power conference. It’s a great opportunity for us to showcase Australia, the beautiful confines of Sydney Harbour, but also the men and women of the Royal Australian Navy and our colleagues in Australian Defence Force and Australian defence industry. It's a great opportunity to explore the future of maritime warfare and the future of sea power through the lens of those more than 800 industry exhibitors here this week, so it's an absolute privilege. I'm really excited about the conversations we're going to have about some of the emerging technologies that we're going to be introduced to over the next few days.

JOURNALIST: Chief, you've got over 40 of your counterparts here. Relations appear to be warming with China. Why is the PLA not here?

VICE ADMIRAL HAMMOND: Thanks Andrew. At this stage we don't have a navy-to-navy relationship with the PLA Navy.

JOURNALIST: AUKUS is obviously a key part of the deliberations. Can I ask about the $4.7 billion that we're contributing to the US submarine base? When do those payments start to happen? And how was that figure arrived at?

MARLES: Well the contributions that we are making to the US was a matter of negotiation with the US in the process which led up to the announcement in March. It is about uplifting United States’ industrial capability so that they can have a greater production rate of Virginia class submarines. But more significantly that they can do greater sustainment to get a greater availability raise of their Virginia class submarines, which enables them to provide us with the Virginias in the first part of the 2030s. So that is the basis on which that has happened. I'll of course reiterate that the vast bulk of the industrial investment that the Government will be making will be right here in Australia and specifically at Osborne in Adelaide. The answer to the question as to when is a function of the processes that are happening in the United States right now. I was in the US last week, there is legislation which is going through the US Congress as we speak, legislation which goes to reducing the export control regime as it applies between Australia and America, legislation which will enable the sale of the Virginias, but importantly legislation which will enable the provision of the Australian contribution to the American industrial uplift.

JOURNALIST: The US Congressional Budget Office has factored in $3 billion from Australia in 2025. Does that sound consistent?

MARLES: Well, the timing of that is a matter that we're working through with the United States but as I say the process by which this will happen can't begin until the legislation passes the US Congress.

JOURNALIST: Australia and the US have tried to ease up ITAR previously more than a decade ago and not much happened. Why is it going to be different this time?

MARLES: Well, it's a really good question and I think you're right that this has been a long held aspiration for the Australian defence industry, because it will dramatically change our access to the US and the ease with which we can exchange technology. Why is it going to be different now? I mean, the answer to that really, I guess, lies in AUKUS. I mean, I do think the relationship between Australia, the United States and the United Kingdom has taken this conversation to a different level. But in a practical sense, we now have this in front of the Congress. That's never happened before. I mean, the legislation which will give effect to the liberalisation of export restrictions in respect of Australia and the transfer of information is in front of the Congress as we speak. Now, last week, I met representatives of the US Senate. I think I met the better part of 10 US senators who are central to this process. We very much respect the process which still has to play out. But there was an overwhelming sense of bipartisan support both for the Alliance with Australia, but for the proposition that we need to be creating a seamless defence industrial base between Australia, the United States and the United Kingdom. And so we are as hopeful as we've ever been that we really are on the verge of something which is very different.

JOURNALIST: Minister, the former army chief Peter Leahy says the Albanese government is ripping the heart out of defence with its recent decisions. What's your response?

MARLES: I will answer that, but are there any other questions that people have –

JOURNALIST: In terms of Navy recruitment, how does this Expo flow into a shortfall and challenges that the Navy are facing to fill a significant gap there?

MARLES: Well, I will throw to Mark for that. But I think one of the– I mean, just an obvious point to make up front in relation to that, this is a really wonderful display of what service in the Royal Australian Navy has to offer. We have the best presentation of Australian sea power on display here and walking around this Expo over the next three days will certainly be enough to get a whole lot of people's blood flowing about the prospect of a career in Royal Australian Navy.

VICE ADMIRAL HAMMOND: Thank you, that's a really good question. Let me start at the beginning, pre-COVID our separation rate at Navy was in the low 6% and every single intake to Navy was oversubscribed. We’ve emerged from the pandemic into a different workforce environment. We're almost total employment in this nation, which means that there is a competition for talent. And whilst the separation rate is still low, it's only 8.5% and coming down, the challenge in front of us is to explain to young Australians in particular the opportunities of service the Royal Australian Navy. We've just conducted a naval shipbuilding jobs expo in Adelaide over the weekend, with a submarine and a frigate alongside. We had an enormous interest. In fact the submarine recruiting team in particular was overwhelmed for the few days that they were there. I think we've got a good story and a good offer. We're an employer that underwrites the cost of living for employees and we pay them to see the world. So that's my intent, is to put the Navy in front of the nation, to explain the opportunities of service in the Royal Australian Navy and to strengthen the teams. Frankly, I think we've got a good story to tell and I encourage you to talk to some of our sailors and officers here this this week.

JOURNALIST: And is there a number in terms of how many more personnel you need to fill that sort of shortfall?

VICE ADMIRAL HAMMOND: The more the better. I'd like to have as much choice as possible, but the doors are open, we are recruiting and I look forward to meeting as many young Australians and frankly those who’ve served before, or those who are looking for mid-career course change. They're all welcome.

JOURNALIST: Admiral, there's been discussion about redoing the decks of the Canberra class to handle F-35s. Is this a pipe dream? Is it possible? Is it something you're discussing?

VICE ADMIRAL HAMMOND: It's not something I'm looking at.

JOURNALIST: Regarding AUKUS, you mentioned some of the international components in terms of US funding, legislation. Just from a domestic standpoint, since it's been announced what have been some of the areas that Australia has been finding are going to be the difficult aspects to work domestically, whether it's building supply chain facilities, workforce. Where do you think you're going to see the biggest difficulties independent of whatever happens with US and UK in terms of funding or legislation?

MARLES: It is a really good question. I mean, this will be one of the most significant industry endeavours in our country's history. Getting onto the horse of being able to produce, actually manufacture a nuclear-powered submarine is a massive endeavour. These are the most complex machines known to humanity. So there is a significant industrial uplift. I think there's a huge challenge in terms of workforce. I think that is right. We're very mindful of that. It's why we are establishing an academy at the at the Osborne Naval Shipyards, which will be focused on that trade level skill, to make sure that we are growing that part of the workforce. It's why we are funding 4,000 additional university places specifically in respect of disciplines which will go into the production of nuclear-powered submarines in this country. I think that is going to be the most critical challenge that we face. Having said that, I feel confident that we can do that. There's obviously a lot that we need to be doing in terms of developing the physical infrastructure both at Osborne in terms of allowing ourselves to generate that production line which will manufacture the submarines, but also in Western Australia, at HMAS Stirling, so that we can begin hosting nuclear-powered submarines as we are already doing, but prepare ourselves for the submarine rotation which will happen later in this decade with the United States and the United Kingdom and ultimately, the operation of our own Australian flagged Virginia class submarines in the first part of next decade. Again, and there's much to do I might say and in respect of all of that, in working with both the South Australian and the Western Australian Governments. But we couldn't want for better partners with them and we couldn't want for better partners with the education sector and indeed with our international partners, the US and the UK, in helping us walk down this path.

VICE ADMIRAL HAMMOND: Firstly, I'll say that the submarine program is a strategic program, it’s a strategic capability so it needs strategic priority, strategic resourcing, and the biggest challenge I think for our nation, strategic patience. I recall with the Collins submarine program we have built submarines in this nation before. We are going to build another submarine. This one will have a different propulsion system, we're not going to build the nuclear reactor ourselves, that will be built for us, it will be installed in submarines in Adelaide. So whilst we're absolutely transparent about, and embracing all of the challenges that come with this program, let's not lose sight of the fact that we have done this before. On a different scale, I acknowledge. A slightly different challenge. But the biggest thing is the strategic patience part. We will make progress. It will be incremental but it will also be quite foundational. And ultimately, it's kind of ironic here, I remember being the navigating officer doing first of class trials on HMAS Collins. And I remember all the bad press about the Collins program back in the day and I've deployed on these things throughout the Indo-Pacific. They are the best conventional submarine on the planet. And I actually have people writing to me now saying I wish we'd built more. So notwithstanding all of the challenges that we quite often talk about, I think it's important to derive some confidence from where we've been in the past and have some confidence in Australian industry and our partners here. I’m really excited about the challenges that lie ahead.

JOURNALIST: Minister Marles, as you said, it's a fantastic exhibition downstairs. Is it akin to taking kids to a toy shop and having an empty wallet, though? I mean, when will the Government look at lifting the budget for defence, as the ADF has been screaming out for you to do?

MARLES: It's kind of in the same vein as the other questions, so I will answer it. But are there other questions we’ve got for Mark?

JOURNALIST: Another AUKUS one, if I may. To get the second hand Virginia class submarines, the US has made it clear they have to increase their rate of production to two plus. The obvious question is what if they can't? Or what if it's indefinitely delayed?

MARLES: This is a strategic partnership between ourselves, the US and the UK. But what really became clear to me both in the United States and the United Kingdom is the degree to which both those countries see it in their strategic, long-term interest that Australia has this capability. So we have enormous confidence in the commitments that have been made to us by both the US and the UK governments around working with Australia to acquire this capability. Yeah, there are steps along the way and we have thought this through in detail and it is going to be important for the US to be able to increase its rate of production in order to enable there to be the space for Virginias to be transferred to Australia. And I'm sure that as we go through what will be a multi decade program, there are going to be moments that have their ups and downs, but the fundamental commitment to the strategic objective of Australia requiring this capability is there and it is there in spades. And I am absolutely confident that across the political spectrum in the US and the UK, also across the political spectrum here in Australia, this is a program that will be delivered over the coming decades.

JOURNALIST: This is for both of you, maybe the biggest hole and Australia's industrial pursuit for AUKUS is nuclear expertise. I know people are being trained at the sub school. What about ANSTO? Are you comfortable with its size? How much are you coordinating with them to beef up their technical expertise since they're supposed to be the main nuclear experts?

MARLES: Yeah, so ANSTO is obviously a really important national asset and you're right that on this day, it forms the heart of most of the nuclear expertise that we would have in Australia. We obviously are working closely with ANSTO about the pathway that we are walking. But you know, and to be clear, you know, reactors obviously will be built in Britain. We're talking about a sealed nuclear reactor which will not need to be open and serviced during the life of its place within the submarines. That said, there definitely does need to be a significant nuclear capability that we grow for this country. And so we're working with ANSTO, with ARPANSA, the regulator. We're in the process of establishing a specific regulator for the naval nuclear enterprise. And we are funding the courses, as I said earlier, at a university level to build the expertise that we need. And as you rightly pointed out, we have Australian servicemen and women at the nuclear propulsion school in the US right now acquiring expertise and I think I'm right in saying they are doing really well.

VICE ADMIRAL HAMMOND: Outstanding. We’ve also got a dozen technicians also working over with Rolls Royce in the United Kingdom. So we've already started this journey for us. We talk about it in terms of technical mastery and professional mastery. In terms of operating and sustaining submarines, we already achieve world benchmarks in terms of performance. The journey that we're on as a Navy is enhancing our understanding of naval nuclear propulsion and meeting the highest standards of navy nuclear propulsion safety. That's within Navy, that's within the Australian Submarine Agency, and it'll be the central plank for the naval nuclear propulsion regulatory authority when that is established by the Australian Government. But we are absolutely alive to the challenges that lie ahead. I would also highlight that we are fortunate to have a number of nuclear qualified submariners in the Royal Australian. A lot of them are lateral transfers from the Royal Navy in the past, so we're not coming off a zero baseline here. We're already on the journey. And we’re really looking forward to watching that capability for over the coming years.

JOURNALIST: Retired General Peter Leahy has given a fairly blunt assessment of your Government's record on defence and says it's ripping the heart out of defence. What's your response?

JOURNALIST: Great exhibitions, amazing technology downstairs, but Australia is not in a position to buy or commit to any of it. Will you look at lifting the defence budget beyond 2% GDP as defence has been crying out for?

MARLES: So thank you for the questions. So firstly, the comments that we see in the media today are just not true. They're not true. And they really– they're a pretty scant relationship to the truth. Fact of the matter is that since coming to power, we have not only committed and fulfilled the commitment of maintaining defence spending on the growth trajectory that we inherited from the former government., we've increased it by 10%. So whereas the former government had defence spending go to 2.1% of GDP in 2032, we have now put defence spending on a pathway to 2.3% of GDP. So there is a significant growth in defence spending above the growth level that we inherited, even above the growth level that we committed to at the last election. So the comments that have been made are just plain wrong. And the fact of the matter is that when we came to power, a full quarter of what Defence was expected to procure in its future, there was no money for. And that's because the former government was in the habit of announcing big programs without allocating any money to them. Or certainly not the money needed to provide for those programs. We had the Hunter program over time, over budget. Offshore patrol vessels over time, over budget. A revolving door of ministers which led to a lost decade in terms of our submarine future capability which gave rise to a capability gap which we have now filled. So that is the facts of what we inherited and the facts of what we are now doing. We are properly funding the program for Australia acquiring nuclear-powered submarines. Guided weapons so that we have a long range strike capability, we've doubled the funding for that so that we actually are putting that on a meaningful trajectory where we will be manufacturing missiles in this country in two years’ time, which is certainly not what was on the cards previously. So the statements that are made are wrong. There are difficult decisions that we have made and there are difficult decisions that we have made because we want to have a focused Defence Force which has the capacity to engage in impactful projection. Now there was no serious strategic thinking about what our Defence Force was meant to do for a decade. And in focusing our Defence Force there are difficult decisions, and we make no apologies for that. But the option is to let our Defence Force languish as it had been prior to us taking government. We are getting the defence budget back in order. We are funding well beyond what we inherited. And we are giving the defence force the focus needs.

JOURNALIST: On the specific concerns about the uncertainty over naval programs specifically, because of the review and also Army’s reduced ability to do certain tasks?

MARLES: We reduced infantry fighting vehicles from 450 down to [129]. We did that because there was no world in which Australia would be able to take 450 infantry fighting vehicles beyond our shores. And we have made really clear what our strategic intent here is. We need to be able to project. We were not going to be protecting with those infantry fighting vehicles. And so former generals can, you know, be sad about the fact that they can't drive those around Australia The fact of the matter is, we need a force which is able to project and we make no apologies for the decisions that we've made there. But we've also got new capabilities. We are properly funding long-range strike. We are standing up a long-range strike brigade for the first time, which we based in Adelaide, where our test ranges are, where our defence industry is. It's a really significant step forward in terms of the lethality and the potency of the Australian Army, and it comes from doing the strategic thinking. Now there are, as I say, difficult decisions, and when you make a difficult decision, you'll always find somebody who will make a complaint about it. But we are not afraid of that because the fact of the matter is, we have a decade of no decisions being made at all and Australia has faced a 10 year capability gap as a result of that.

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