Television Interview, ABC Afternoon Briefing

SUBJECTS: Washington Defence Budget; Virginia Class Submarines, WA GST Deal. 

GREG JENNETT, HOST: Eight years from now, Australia is buying the first of three, maybe even five, nuclear powered submarines from America. So, decisions on Washington Budget spending for Defence, particularly on its production of these boats that are made now, will be critical in ensuring it has enough around in 2032 to start selling boats to its AUKUS partner Australia. Now, watching the byzantine processes of how it sets its Defence Budget, we discover that the US Navy is slowing production of Virginia class subs. Is the Australian government worried though? Well, straight from a cabinet meeting Deputy Prime Minister and Defence Minister Richard Marles joined us a few moments ago from Darwin. Richard Marles, always good to have you on the programme. Welcome back. A bit to discuss today on the AUKUS programme. So, twelve months ago, almost to the day, Joe Biden stood on a dock in San Diego with Anthony Albanese and Rishi Sunak. There, the President said, each of our nations is making concrete commitments to one another, we're backing it up with significant investments to strengthen industrial bases. But now the US is proposing to slow rather than accelerate Virginia class submarine construction. Isn't the administration backsliding on those concrete commitments to AUKUS?

RICHARD MARLES, DEPUTY PRIME MINISTER: No, I don't accept that, Greg. The fact that the American industrial base is stretched in 2024, as it was in 2023 when we made this announcement, is not news. It formed part of the landscape against which this arrangement was agreed a year ago. I think what's important to see in the Budget that's been put forward by the Biden administration is an $11 billion commitment over the next five years to grow the industrial capacity within the United States to produce Virginia class submarines, which will see an increase over that time in the tempo of Virginia class submarines produced. That's what we need to see. That's as expected. The fact that the industrial base is tight in this year is something that we already understood. And so we welcome the fact that we are seeing an increased commitment of funding over the next five years.

JENNETT: Yeah, I do see that in the out years. Do you have an agreement with the US, though, on the number of Virginia class boats that it needs to have in its own fleet in 2032, which is when the first is scheduled to be sold to Australia?

MARLES: Well, the commitment we have with the Biden administration and the American government is around the provision of Virginia class submarines to Australia, and that commitment absolutely remains in force. And we should just remember that, of course, the first of the submarines is not a new submarine. That's part of the announcement that we made last year. I think if we take a step back, when we made this announcement last year in the last twelve months we've seen a power of work be undertaken by us here in Australia, but in the UK and very much in the US as well, the very first step was to see an increase in the number of nuclear powered submarine visits to Australia. There's an LA class submarine at HMAS sterling right now, the USS Annapolis, and we have seen that increased tempo of submarines come to Australia. If you look at the legislation which went through the Congress last year, this was groundbreaking legislation undertaken by both the Congress and the US administration, which provides for the submarines to be transferred to Australia. So, the US government has been meeting its commitments and continues to do so. And even in the news of the Budget which they have put forward this week is contained an $11 billion commitment over the next five years to grow the industrial base in the US, which is obviously very important.

JENNETT: Sure. But you're saying, or you seem to be under the very clear impression, that there's a rock solid commitment to make that first boat available for transfer or sale in 2032. Just to clarify, are you saying that's regardless of whether the US can get back to the desired production rate of just over two boats or not per.

MARLES: Year, there is absolutely a rock solid commitment to Australia. And that's a commitment which has been reiterated by the US government and it forms part of a commitment that the United States is making not only to Australia, but also to the UK as part of the trilateral AUKUS agreement. And again, when you look at all the work that's been done over the course of the last twelve months from all three governments, it speaks to the ongoing commitment which all of us have to meet the time frames within the AUKUS arrangement. 

JENNETT: One consequence of this Budget bid, which is a slowdown to one Virginia class boat in 2025, is that it's conceivable they might ask Australia to do even more in helping fund the rebuild of the American industrial base for submarines. Would you be prepared to spend more if such a request came through?

MARLES: Well, again, we reached an agreement a year ago and there's been no suggestion of any of that being revisited, which did see Australia making a contribution to the US industrial base, precisely because a year ago the American government was very upfront about the fact that there was a tightness in the industrial base which reflects the Budget that's been put forward and we're making that contribution. I mean, there's no suggestion of any change to that. We've reached an agreement about what our contribution will be and that agreement stands. And when you look at that agreement when you look at the fact that this Budget reflects a reality of the tightness of the industrial base today, but looking forward, which is actually when we will be receiving the Virginia class submarines, sees an increase in the American commitment to their own industrial base. They are living up to the agreement which we all reached a year ago.

JENNETT: It's just that there are a few things in flux. You may have noticed that the US Navy, as part of this announcement, has also ordered a rapid fire, 45 day review of all naval shipbuilding. That obviously includes surface ships as well. Would the Australian government seek to make its AUKUS needs known or reiterated to that.

MARLES: We constantly work with the American government around how we fulfil the agreement that we all reached. And the bottom line here, Greg, is we couldn't be happier with how the American government is responding to the agreement that we all made a year ago in terms of the decisions that they are making over the course of the next decade and beyond, we're going to watch governments quite legitimately undertake reviews of their own circumstances and their own needs going forward. This agreement sits in the context or any review will take place with this agreement being a part of the landscape that each country is walking forward with. We've done our own review over that period of time, but none of those things put into question the fact that AUKUS is going to be followed through on and it is being followed through on. What we need to judge here is, are we seeing steps taken by all three governments to pursue the agreement that we reached a year ago? And the answer is, when you look at the last twelve months, there's been a power of work. And even in respect of this decision which is making the news today, there is within it an increased commitment of money for the production rate in the US going forward.

JENNETT: Yeah, now I hear your confidence. I really don't want to labour the scepticism, but I might just ask one more, if I can Richard Marles. There is a bigger trend in the sort of story that is laying behind this Defence Budget request in the US, and that is that it's being tailored to meet operational costs, in some cases, operations that weren't foreseen like the Red Sea with Yemen Houthi attacks would be but one example that's been cited in Washington DC in unpredictable times. That has to be a worry, doesn't it? Because unexpected operations could arise at any time, just as they have in the Red Sea very recently. That could quite conceivably sap naval construction to Australia's detriment, couldn't it?

MARLES: Well, we can look forward at a whole lot of question marks about what the future holds. We live in a world which is challenging, where the future is not easy to see. And it's precisely in that context that obviously we are seeking to increase our own naval capability through the acquisition of a nuclear powered submarine capability. But it's in that context that America sees the benefit, the strategic benefit, in terms of its own national interest in Australia having this capability. And the way to answer that question is to think it through in those terms. Does it remain part of or in the interests of the United States, its future strategic interest for Australia to have this capability? The answer is clearly yes. Indeed, the more uncertain the world is, the more America is going to need a capable partner, which only adds to the weight of seeing this agreement fulfilled. But again, I come back to the fundamental point here. Have the steps been taken since we reached this agreement to fulfil it? Yes, they have. And actually, I think the decision that we've seen this week from coming out of the American administration in terms of the Budget that they've put forward is entirely consistent with that.

JENNETT: All right, very quick final one as Deputy Prime Minister wearing that hat. Richard Marles, you may or may not have noticed today that a fire storm is brewing among state treasurers squabbling over GST and other big funding deals around hospitals and schools. When will the Commonwealth abandon the WA GST guarantee deal that's described as absurd by NSW. When will it do this in the interests of cohesion in the federation?

MARLES: Well, we've made clear our support for that deal. We've made that abundantly clear. And the Prime Minister could not have made that more clear in recent weeks when we were in Western Australia. I mean, we've seen a decision today of the Commonwealth Grants Commission that's an independent body. It is going to make the decisions that it makes. And all we're watching now is a reaction to that.

JENNETT: We'll wrap it up there. Richard Marles, as we observed at the outset, it is a busy day for you and other cabinet Ministers in the top end, and for that we thank you for finding a few minutes with us.

MARLES: Thanks so much Greg. 

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