Radio Interview, 6PR Perth Mornings

INTERVIEW WITH GARY ADSHEAD
6PR PERTH MORNINGS

FRIDAY, 22 MARCH 2024

SUBJECTS: AUKUS nuclear submarine program funding, Peter Dutton’s nuclear fantasy.

GARY ADSHEAD: Rightio, well, the latest developments in the ongoing AUKUS nuclear submarine program that the Australian government has entered into has been announced. It involves sending $4.6 billion to the UK Government, and through that – and I’m going to clarify this, because I must say there’s a little bit of confusion around it from what I’m reading this morning – from that the beneficiaries will be BAE Systems and Rolls-Royce in terms of their capabilities to build the nuclear reactor – nuclear reactors that are required for these submarines. 

But let’s go to someone who knows more about it than me – that’s Pat Conroy, the Minister for Defence Industry. Good morning to you, Minister. 

MINISTER FOR DEFENCE INDUSTRY PAT CONROY: Good morning, how are you? 

GARY ADSHEAD: Good. Can you just explain it to me then? So it’s 4.6 billion. It goes where? 

MINISTER CONROY: Yeah, so this is one part of the much larger plan to build nuclear-powered but conventionally armed submarines in Australia, which will be the most advanced submarines in the world. Part of that – and this is always factored into the planning and budgeting – is a payment to the UK Government that will then flow through to do two things. One is to help design SSN-AUKUS. So it’s quite right that as we’re acquiring close to half of the submarines that we make a contribution for the design of the submarines. And, secondly, we’ve always been planning to acquire the reactor and the reactor module from the United Kingdom through Rolls- Royce, and they have to expand the factory to build our reactors and start buying the plant and equipment and start producing the parts to go into our reactors. So this payment has always been factored into and is part of how we actually build our own submarines in Australia. 

GARY ADSHEAD: Jaw-dropping amounts of money, you would agree. And, of course, we know that we won’t get a return in terms of those submarines being in service and active until the 2040s. So how do you convince the taxpayer it’s money well spent? 

MINISTER CONROY: Well, I’d say two things: one, these will be the most advanced submarines in the world and they will absolutely uplift the Royal Australian Navy and our national Defence. But these things take a long time to build even if you’ve been building them for 60 years, as the United States and the United Kingdom have been doing. So it’s sort of jaw dropping that they’re already starting to produce the parts for the reactor to go into our first submarine that won’t enter service until the early 2040s. 

Importantly, we’re also acquiring three to five US Virginia class submarines to cover the gap between the Collins class retiring and us building our own submarines. And the first one of those will enter service in Australia in the early 2030s, so less than 10 years away now. 

GARY ADSHEAD: Are you confident that the US can deliver on the other Virginia class given some of the production issues that they’re having in the US? 

MINISTER CONROY: Absolutely. President Biden’s latest Defence budget allocated another $11 billion to increase their industrial base. That’s on top of 3 billion he’d already allocated last year for the same task. They’re making huge investments to speed up their supply chain and get more people in. And that includes Australian companies. So, for example, Austal, one of Australia’s best shipbuilders based at Henderson, they’re building parts for the Virginia class submarine for the United States Navy in their Alabama shipyard. So the US Government is putting in staggering amounts of money to increase production rates, and we’re seeing the early returns from that. 

GARY ADSHEAD: Can I just ask you a bit of a glib question from the debate that’s going on with the Coalition’s policy around nuclear power? So nuclear-powered submarines, good – we’ll spend a fortune on that – but nuclear power for homes and businesses in Australia, bad. 

MINISTER CONROY: Well, as I often joke, you can’t have solar-powered submarines, and that’s the key difference. Nuclear power in submarines provides the concentrated and endless energy that allows us to have the most capable submarines in the world when they’re produced. But nuclear power for Australia is five times as expensive as wind and solar, made completely reliable when you invest in pumped hydro, batteries, a bit of peaking gas and the transmission lines. So, don’t take my word for it; take the independent scientists at CSIRO, who have found that nuclear for domestic electricity production is four to five times more expensive than solar made 100 per cent reliable. So my argument is purely on price. I don’t want our households’ electricity prices to go even higher, and that’s what Mr Dutton is arguing for by his nuclear fantasy. 

GARY ADSHEAD: All right. Now, just explain to listeners, obviously the announcement was being made in Adelaide today around the funding for the AUKUS submarines. It was made in Adelaide at the shipyards there but how will we in Western Australia benefit from this? 

MINISTER CONROY: Yes, so the key announcement today was the announcement of who would be actually building our submarines, and that will be a joint venture between ASC – Australian Submarine Corporation – owned by you and me and every single taxpayer and citizen in this country – and BAE Systems. So they’ll be building the submarines in Adelaide, and that will create thousands of jobs. We’ve also announced that ASC will be the sustainer, so they will maintain and sustain the Virginia class submarines that we’re acquiring from the United States and also the visiting United States and UK submarines as they start coming into the Submarine Rotation Force West from 2027 onwards. And that’s great news for WA. 

We’re upgrading HMAS Stirling and that’s going to create 3,000 construction jobs, and there’ll be 500 new permanent, high-skilled jobs sustaining the visiting US and UK submarines and then our Virginia class submarines. And, in fact, over a hundred employees of ASC, mostly from WA, will be based in the US naval maintenance facility in Pearl Harbour, Hawaii, from next year helping maintain the US nuclear submarines. So that’s great news for the local economy in WA and it’s great news for our defence ability. 

GARY ADSHEAD: Can I just ask you before I let you go, so when these kind of contracts – and they’re massive and, as I said, jaw dropping, the numbers – when they’re being drawn up, I mean, what sort of – what sort of protection do we have from cost blowout and time blowout, I suppose, but certainly cost blowout for taxpayers?

MINISTER CONROY: Yeah, we are very focused on this. This is the single biggest industrial undertaking this country has ever done. It will create 20,000 high-tech jobs. But they are very significant amounts of money. We’re being prudent, so I’ll give you two examples: one, the dollar figure that people bandy about, which not our official figure but people have sort of used it, of around $368 billion, that includes 50 per cent contingency. So that is us putting in place the prudent contingency that you would expect for a very large project. People have contingency when they build an office block or build a new mine. We’ve got a very big contingency to deal with challenges that come up during the production process. 

And, secondly, we’ve learned from past procurements. So, for example, our first nuclear-powered submarine won’t hit the water until somewhere between three to five years after the first British one. So they’re taking all the risk of being the first of type and we’ll be in a much better position to learn from how they’ve constructed their ones, the mistakes that inevitably will be made and the corrections. So we’re being very sensible. We’re learning from past construction challenges around things like the Collins class submarine. And in the end we’ll get the best nuclear-powered conventionally armed submarine in the world that will massively upgrade our defence ability and create 20,000 jobs in the process. 

GARY ADSHEAD: Yeah, because I suppose people would say, well, if it’s not actually going to be in service until 2040 how confident could the government be that what’s going to be in the water is state of the art, is up to date with the sort of technology that’s required to evade enemy detection et cetera. 

MINISTER CONROY: Well, we’re obviously constantly monitoring what other countries are doing and investing in and developing countermeasures. And a lot of these platforms and systems go through upgrade cycles. So, to use an example, we’ll be using an upgraded version of the combat system that the United States submarines and our Australian Collins class submarines already use. That’s the most advanced submarine combat system in the world. That’s jointly developed between Australia and the United States, and that goes through upgrade cycles like your iPhone or anything else. So it’s about being on top of the technology. But some things you have to start building early on like the reactors and then you just build a sensible development path to deal with technologies that come through. 

GARY ADSHEAD: All right, Minister. Thanks for explaining all that to us. Really appreciate your time. 

MINISTER CONROY: Not a problem. Have a great morning. Bye-bye. 

GARY ADSHEAD: Good on you. Pat Conroy there the Minister for Defence Industry. Yes, they are huge volumes of money and sometimes hard for me to get my brain around. You know, the $4.6 billion in this instance that will go most low offshore in terms of developing these submarines. But we just have to accept that we need these kind of deterrents in the future. We probably need them now, but we certainly will need them in the future.

ENDS