Press Conference, Canberra

SUBJECTS: Contract with Lockheed Martin Australia, Defence Strategic Review, Joint Strike Fighter Development Program, Disposal Strategy for Taipan helicopters, Nauru, Middle East.

MINISTER FOR DEFENCE INDUSTRY PAT CONROY: Good morning everyone. This morning I'm joined by Air Marshall Leon Phillips, head of the Guided Weapons and Explosive Ordnance Enterprise, Major General Richard Vagg, head of Land Capability and Warren McDonald, Chief Executive of Lockheed Martin Australia.

As you all know, anyone who's witnessed recent conflicts, we live in the missile age. We live in an age where our adversaries, potential adversaries and other nations around the world are investing in greater and greater long-range strike, and we've been very clear upon coming to Government that the Australian Defence Force needed to increase its ability to hold potential adversaries at arm's length.

The Defence Strategic Review made some very strong recommendations around increasing our investment in long-range strike as a key way of deterring potential conflict and contributing to peace and stability in the Indo-Pacific.

In response to the Defence Strategic Review, the Albanese Labor Government committed $4.1 billion across the forward estimates to invest in long-range strike and missile manufacturing, and that included bringing forward $1.6 billion to invest in long-range strike, and with an objective of manufacturing missiles in 2025.  

Our first long-range fires regiment for the Australian Army will be established in 2030, seven years ahead of pre-DSR plans – such is the urgency of this situation.

So today I'm announcing a $37 million contract with Lockheed Martin Australia to begin manufacturing missiles in Australia in 2025.

Let me repeat that. When we came to Government, the Guided Weapons and Explosive Ordnance Enterprise consisted of two media releases announcing the establishment of it, and two strategic partners. We took urgent action, and Australia will be making its own missiles in 2025, contributing to deterrence and peace and stability in our region.

This contract is about manufacturing an initial batch of missiles to facilitate technology transfer from the United States, establish processes for engineering certification and building the technical skills in an Australian workforce ahead of manufacturing at scale.

We'll initially begin with the guided multiple‑launch rocket systems that have been fired from the high mobility artillery rocket systems, the HIMARS that have been put to devastating effect in the Ukraine conflict.

I'm also announcing today that we'll be acquiring our first batch of precision strike missiles. These precision strike missiles have the ability to strike targets at up to 500 kilometres, again being fired from the HIMARS weapon systems.

So, over the course of a relatively few number of years, the Australian Army will go from its longest‑range weapon being 40 kilometres to then 70 kilometres and then 500 kilometres under the Albanese Labor Government, and this is part of the transformation of the Australian Army as part of our response to the Defence Strategic Review.

I'm also announcing today that we have joined the Development Program for PRSM Increments 3 and 4 that have the objective of extending the range of PRSM for both land and maritime strike to around 1,000 kilometres, a very significant announcement, and a very significant contribution.

So again, the long-term goal is to move the Australian Army from being able to strike at 40 kilometres to strike at 1,000 kilometres. This is part of the Albanese Labor Government's commitment to investing in the defence of our nation and meeting the strategic urgency that we face at the current time.

I'm happy to take questions on the announcement first, and then after that, I'll ask is the gentlemen behind me to step away if there's any other questions people would like to ask.

JOURNALIST: Where will we be building these missiles, and who will actually be doing it, I presume Lockheed Martin and others, and will it be the entire round? Are we going to be building the guidance system as well?

MINISTER CONROY: So, the initial batch that will prove up our capability will be manufactured at the Orchard Hills facility in Western Sydney to test out those processes, they'll be undertaken by Lockheed Martin employees.

The long‑term goal is to establish a facility when we're manufacturing at scale, and we'll initially start with assembling of sub‑componentry provided by the United States, and then the long‑term aspiration is to develop the capability to build all aspects of the missile round in Australia.

JOURNALIST: I think from memory we invested $70 million in the early development of PRSM. Did we get anything in particular for that, or did it just get absorbed into developmental costs?

MINISTER CONROY: Well, I will invite Air Marshall Phillips to make a contribution, but we're part of the Development Program for PRSM Increments 1 and 2, which is what we're requiring today. We're now joining the Development Program for Increments 3 and 4. So obviously being part of the Development Program, we got access to the technology and got access to the actual weapon. But Leon, was there anything you wanted to add?

LEON PHILLIPS: Thanks, Minister. May I just say, by joining these early cooperative Development Programs, that also means that we get early access to the technology, we can start some of those early planning discussions to get early acquisition, but obviously our aspirations moving forward are, you know, co-development leading to co-production, and that's certainly what we are looking to do in later phases, particularly around Increment 4.

MINISTER CONROY: And that's an important point Leon was making. By joining the development pathway, it's not just access to technology, it's about getting Australian companies into the supply chain, that's the aspiration, as we continue on this project, the Joint Strike Fighter Development Program is obviously the gold standard for how that was done, and we have aspirations for the precision strike missile as well, as we establish an Australian missile manufacturing capability in this country.

JOURNALIST: Minister, just on those precision strike missiles, do you have a timeline for the acquisition of those, or a price tag for their acquisition?

MINISTER CONROY: I'll see if Leon has ‑ I think the actual price is commercial in confidence. I'll invite General Richard Vagg to make a contribution about the timelines.

RICHARD VAGG: Thank you, Minister. Very exciting announcement for us. As the Minister stated, we'll have a long-range fires regiment by 2030. That's core to underpinning our transformation of Army to an Army that's focused on Littoral Manoeuvre, in conjunction with our Littoral Manoeuvre vessels and the LAND 400.

To get to the core of your question, we expect to have a PRSM capability by mid-decade, and I don't want to go into any further detail on that, and we'd be seeking to achieve those extreme ranges that the Minister talked about out to 1,000 kilometres towards the end of the decade.

JOURNALIST: Minister, you say we live in the missile age. Where is the suspected threat coming from? Who are we protecting ourselves against?

MINISTER CONROY: Well, again, I think it's probably inappropriate to talk about potential adversaries, but what I can say is we're facing the greatest arms race in our region since 1945, and we're facing strategic uncertainty at levels again not seen for some time.

When you combine that with the fact that we've lost a 10-year warning horizon for a major regional conflict, which was announced in the 2020 Defence Strategic Update means that we've taken these necessary actions.

But people just have to look around the world to see that there's a number of countries that are intent on breaching the rules-based International Order.

JOURNALIST: How are we going standing up production of spike missiles?

MINISTER CONROY: Again, I'll invite General Vagg to make a contribution. The spike missiles are part of LAND 400 phase 2. We'll be manufacturing the cannisters in country, but the actual round will be imported. That's correct, isn't it, Leon? Yep.

LEON PHILLIPS: Thank you for the question. Yeah, we are working with Varley to get a proposal, and we'll go and evaluate that proposal, and if it's of value, we'll put that to Government for consideration. So, the initial batch will be coming off an extant production line, and we've asked for them to give us a paper for domestic manufacturing options.

JOURNALIST: [Indistinct] put that proposal to the Government in I think 2018. Six years on, we're still thinking ‑‑

LEON PHILLIPS: It's a revised proposal that they're working on. We're looking to evaluate that when we get that. Thank you.

JOURNALIST: Just on today's announcement about manufacturing missiles, just to clarify, back to the first question, will jobs be created from next year?

MINISTER CONROY: There will be a small number of jobs created when we do the initial batching to prove up the capability, and I'll invite Warren McDonald to make a further contribution. So, we're not over-egging the pudding. The initial batching will lead to a small number of jobs. The long-term aspirations will be to manufacture thousands of these rounds, not just for our domestic needs. In order to do that we'll require a purpose-built facility, and you can expect to see a workforce of a significant number.

At the moment what we're focused on is proving up the capability, testing obviously the export licensing for the United States, testing our ability to certify these weapons, to prove they're doing what they say they do, and then the goal is to build a long‑term manufacturing capability that will require a significant workforce.

JOURNALIST: How long would that take?

MINISTER CONROY: The DSR ‑ I'll invite Warren to talk in a second ‑ the DSR recommended, and we committed that I will be taking a business case to the National Security Committee of Cabinet in the second quarter of this year that had our longer-term plans. You can expect us to make further commentary about that.

But the key thing is by making the initial batch of missiles, we prove up the capability, we prove that Australia can do this, we'll then look at building a facility to make thousands of missiles, not just to equip us, but potentially support allies around the globe.

Warren, did you ‑‑

WARREN McDONALD: Thank you, Minister, and thank you for the question. Currently, we are about to onboard six engineers, Australian, out of an applicant pool of 40, there was quite a strong application for them.  They'll travel to the United States and work alongside specialist manufacturing engineers where they'll learn their skills. They'll then return to Australia where they'll be responsible for setting up and certifying the factory in Western Sydney. Thank you.

MINISTER CONROY: And I should just add on that, we've already got hundreds of high‑skilled Australians working in areas such as explosive ordnance and sub‑componentry of missiles around the country. You just have to go to Mulwala or Benalla to see a highly‑skilled workforce. We make parts for what's called the Evolved Sea Sparrow Missile in this country already. So, we're building on great Australian expertise, but this is taking it to a scale potentially that we haven't seen before.

JOURNALIST: Minister, can we go to other questions?

MINISTER CONROY: Any other questions on this announcement first?

JOURNALIST: Minister, before General Vagg leaves, I know it's not his area of expertise, but things are kicking off, you know, in a nasty way in the Middle East. I want to ask about Australia's capacity to increase our contribution on that front.

MINISTER CONROY: Well, I might ‑ that's really a question for Government rather ‑‑

JOURNALIST: We want someone from uniform addressing this, ADF's capacity to ‑ for additional contribution.

MINISTER CONROY: Well, I can say to you, I might ask the gentlemen to move away at this point. On that broader question, the Australian Navy has made it clear that it has sufficient vessels to meet our operational requirements. Our decision around contributing - the nature of the contribution to the Middle East was a strategic decision based on what we thought was appropriate. Our focus is on our immediate region. We are tripling our representation and our contribution to the Combined Maritime Force.

JOURNALIST: When you say, "We are tripling," it looks like we're not there at all at the moment, it's just the guys who are already there. How is it that your senior Minister said that it was a hard decision to make, or a decision not easily made or might be made when they're not there?

MINISTER CONROY: Well, we've made it very clear about the timelines. Minister Marles, Deputy Prime Minister Marles made it very clear that the tripling of the contribution to the Combined Maritime Force would occur by the end of this month. We are on track to meet those deadlines. He said that when we made the announcement in December last year.

JOURNALIST: So, the Prime Minister was wrong when he said that we have sent the help that is required, and secondly, if I may, how will we crew nuclear submarines when we can't keep all of our Anzac frigates in the water?

MINISTER CONROY: No, I reject the assertion of the first part of your question, Ben. We are in the process of sending those people, some have already gone. The complete tripling will occur by the end of the month.

On your second question, let's be very clear that we've been very clear with the Australian people that we have workforce challenges in the Australian Defence Force. That's not new, that's been occurring before we came to power. We continue to work on it, we've developed strategies that we're implementing, and Minister Keogh has made public statements about that.

We're training Australians right now at the Naval submariner schools in the United States as the start of that process. We've got a well-thought-out phase‑in plan to crew nuclear-powered submarines, and I'm confident we'll get there.

JOURNALIST: When will the Defence workforce start to show improvement?

MINISTER CONROY: Again, those questions are best directed to Minister Keogh who's the Minister for Defence Personnel. But we've been frank with the Australian people that we've got challenges, as do many militaries around the world, as do many employers around the world post‑Covid, there is a significant strain on getting good employees, and we're working on that right now.

JOURNALIST: Minister, on the Pacific, we've seen overnight that Nauru has switched its diplomatic recognition from Taiwan to China. Taiwanese media reports are saying that "The straw that broke the camel's back was Taiwan's failure to provide an extra $125 million that the Nauru Government requested to help with the shortfall left by the downscale of the regional processing centres Australia funds in Nauru. China has filled that gap and provided that money instead, according to these reports. Are you concerned that essentially Australia cutting funding to Nauru has opened the door to Taiwan switching recognition to China?

MINISTER CONROY: This was a decision by the Sovereign Government of Nauru, and we respect their decision. I would make the point that three Pacific Island Forum members recognise Taiwan, 13 members recognise the People's Republic of China, including Australia, and we've got excellent relations with every single Pacific Island nation, including those ones who recognise the PRC. So we respect Nauru's decision.

What you've seen under the Albanese Labor Government is a very significant improvement in our relationship with the Pacific. We're turning up, we're listening, we're acting on their priorities, and you're seeing that bear fruit, whether it's the Falepili Treaty with Tuvalu, whether it's the Bilateral Security Agreement with Papua New Guinea, whether it's the very successful visit to Australia by Prime Minister Rabuka, you're seeing an Australian Government that is reversing the disastrous trend that was occurring under the Liberal Coalition where the Pacific was neglected, which was undermining not just our relationship with the region but our national security. Daniel.

JOURNALIST: On the same topic, was the Australian Government taken by surprise by this announcement by Nauru?

MINISTER CONROY: No.

JOURNALIST: And when did you become aware of it then?

MINISTER CONROY: I won't go into those details, but ‑‑

JOURNALIST: Were you aware before the election; the Presidential election?

MINISTER CONROY: I can be very clear that we were aware in advance of the announcement that was being made.

JOURNALIST: Was Australia ‑‑

MINISTER CONROY: Sorry, just one ‑ I'm going to let people who haven't had a go ‑‑

JOURNALIST: ‑‑ Was Australia asked to provide additional funding to a [indistinct] situation?

JOURNALIST: Minister, what contingency plans do you have in place for AUKUS for a Trump presidency?

MINISTER CONROY: Well, I've been very clear with the Australian public and journalists that the AUKUS arrangements have very strong bipartisan support. I had the privilege of being in the United States Senate gallery to witness the vote to support critical AUKUS legislation in December last year to get an 80 per cent vote in the Senate, the US Senate, and to get a 75 per cent vote in the House of Representatives demonstrates the strong bipartisan support for AUKUS in the United States, and I'm confident that bipartisan commitment will continue.

JOURNALIST: Minister, why have you decided to bury the Taipans instead of sending them to Ukraine?

MINISTER CONROY: Well, let's be very clear what we're doing. We made the right decision to immediately ground the MRH‑90 fleet after the tragic accident in Queensland, and we made a decision to bring forward the replacement of them with Black Hawk helicopters. We immediately began a disposal strategy for the MRH‑90s. That first step was contacting other users of the helicopter to see if anyone was interested in buying the air frames. There was no interest.

Secondly, we then worked with Airbus to see if there was any potential new customers interested in buying the air frames. There was no interest in that either. So then ‑

JOURNALIST: Are you saying Ukraine wasn't interested?

MINISTER CONROY: So then we moved to develop a disposal strategy that offered best value for money for taxpayers, which was disassembly and sale of the spare parts.

Some months after that process began, Ukraine made a formal request for the MRH‑90s. It will require considerable taxpayers' money and time to get those aircraft back into flying conditions. And I should also make the point that there are multiple crash investigations still going on right now to determine the cause of that tragic accident in Queensland. So, it would be irresponsible for us to move away from the disposal strategy that we've locked on in.

JOURNALIST: Why don't you ‑‑

JOURNALIST: Last question, please, last question.

JOURNALIST: Why don't you at least freeze the disposal of these until you can work out whether you can actually give them to Ukraine or any other willing buyer?

MINISTER CONROY: We've made it clear, there are no willing buyers, let's be very clear about that. There is no one through the processes we established who are prepared to buy these helicopters, and that's why we started this disposal strategy that offers the best value for money for taxpayers.

JOURNALIST: Did Nauru ‑‑

MINISTER CONROY: We will always act in the best interests of taxpayers, and this disposal strategy offered the best value for money for Australian taxpayers.

JOURNALIST: Did Nauru ask us for any financial support to avoid its decision regarding China and Taiwan?

MINISTER CONROY: They had no conversations with us about that particular matter of switching diplomatic recognition, other than giving a heads-up that a decision had been made.

JOURNALIST: Are you suggesting ‑‑

MINISTER CONROY: Thank you very much everyone.

ENDS