Television Interview, ABC Insiders

SUBJECTS: Exercise Talisman Sabre 2025 and foreign surveillance, Australia’s relationship with China and the United States, AUKUS and Defence spending.

HOST: Time now to talk to the Defence Industry Minister, Pat Conroy. To take us there, Brett Worthington spoke to Australia's former Ambassador to China, Jeff Raby, for this week's Insiders On Background podcast about the tightrope the Prime Minister must walk between our largest trade and strategic partners.

JEFF RABY: We have China on a charm offensive. Donald Trump's created a great space for China to move into on a charm offensive. But I think we need to lift our sight and this is the moment in which we can lift our sights and start to realise greater opportunities from this relationship and not be held back by those dreadful years of the trade disputes.

HOST: Pat Conroy, welcome to Insiders.

MINISTER FOR DEFENCE INDUSTRY PAT CONROY: Thanks for having me, Patricia.

HOST: Is building a stronger trading and economic relationship with China a way of Australia maybe insulating or protecting itself, given the changing economic position and tariffs from the United States? 

MINISTER CONROY: Now, this is about Australia having good international relationships with everyone in the world. The Australian people expect us to invest strongly in our diplomatic capability as well as our military capability. China is our largest trading partner. 25% of our exports go to China. We've worked hard to stabilize the relationship and unblock $20 billion worth of trade. That's hundreds of thousands of jobs that we've helped protect. So, Prime Minister Albanese's trip is all about promoting jobs, promoting trade, but also managing differences. Dialogue is about managing differences, not eliminating them. And that's obviously one of the key goals of Prime Minister Albanese.

HOST: But you said 25% is the rate. Would you like that to be higher?

MINISTER CONROY: Well, we'd love to sell more to everywhere in the world.

HOST: But specifically on China, because that's what this week's trip is about. Would you like to increase that 25% to a higher rate?

MINISTER CONROY: Well, we'd like to increase the pie as a whole. And Prime Minister Albanese announced a tourism initiative on his first day in China. We'd like to see more Chinese tourists coming to Australia, spending their money and driving more Australian jobs. So, the economic relationship is important, but the discussions will be much broader than that. They'll cover human rights issues, they'll cover our view about security in the region. This is a complex relationship, but it's one we'll handle in a mature, adult way, as we have over the last three years.

HOST: Elbridge Colby, who's the Defence Under Secretary for the United States, has been pressing Australia and Japan about what position we would take if there was an escalation and a war between China and Taiwan. What is our answer when we're pressed?

MINISTER CONROY: Well, our answer is the same one that DPM Marles gave in Parliament in an important statement a couple of years back. The sole power to commit Australia to war or to allow our territory to be used for a conflict is the elected government of the day. That is our position. Sovereignty will always be prioritised and that will continue to be our position.

HOST: But that's not the question that's being asked. It's not about sovereignty. It's how we would react if that scenario was established. Are we giving a clear answer behind closed doors to these repeated questions?

MINISTER CONROY: Well, first, I don't disclose confidential discussions, but I'll make a couple of broad points. One, we don't engage in hypotheticals. We don't discuss hypotheticals. But secondly, the decision to commit Australian troops to a conflict will be made by the Government of the day, not in advance, but by the Government of the day. And that's our position. And it's been long established.

HOST: Foreign Minister Penny Wong gave a pretty significant speech, as you know, last week. She talked about, and I'm quoting from her speech, the worrying pace of China's nuclear and conventional military build up and it's not happening with the transparency the region expects. Do you share those concerns that China is not being transparent about its build up in the region?

MINISTER CONROY: Absolutely. And that's a position that we've long articulated. It was in the National Defence Strategy that we released last year. China is engaging in a very significant build up of its military forces, both conventional and nuclear, and they need to be more transparent about that. We've said that publicly, we've said that privately and will continue to do so.

HOST: Will Prime Minister say it in his meeting with Xi Jinping? 

MINISTER CONROY: Well, again, I'm not going to foreshadow everything that the Prime Minister will or won't say. But the conversation with his counterparts will cover economic security and human rights issues. We've been very clear about that. But we are being very clear that we want a balanced region where no one is dominated and no one dominates. We're seeing in my portfolio of the Pacific, China seeking to secure a military base in the region. And we're working very hard to be the primary security partner of choice for the region because we don't think that's a particularly optimal thing for Australia. 

HOST: Penny Wong did raise with her counterpart the circumnavigation of Australia by the Chinese flotilla. Just a really direct question. Will that be raised by the Prime Minister in his talks with the President and Prime Minister?

MINISTER CONROY: Again, the Prime Minister's conversation with his counterparts will cover security, human rights and our economic relations.

HOST: So, you expect something like that, the circumnavigation, to be raised at that high level.

MINISTER CONROY: I'm not going to get into the nitty gritty of what the PM will or won't say.

HOST: But is that the right place to raise us such a thing?

MINISTER CONROY: Well, we've been very clear both publicly and privately that we thought that China should have provided more notice about its live firing exercise. It was not what we do. We normally give 12 to 24 hours notice before a live firing exercise. They gave notice, but we regarded it as insufficient. We'll continue to articulate and raise that both publicly and privately.

HOST: Ok, so this would be the right time to raise it.

MINISTER CONROY: Again, we'll continue to raise it, but I'm not going to get into the nitty gritty of what the PM will cover in his conversations.

HOST: Ok. Defence has confirmed that it expects Chinese surveillance vessels to monitor the biannual Talisman Sabre war games. Is that happening?

MINISTER CONROY: Well, Talisman Sabre launches today. It's our most important bilateral exercise with the United States. 30,000 personnel from 19 countries will participate. It's not unusual for other countries to observe that. China has observed those exercises for the last four exercises since 2017. It won't be unexpected if they continue to do that.

HOST: Okay. Do we know if they're currently surveilling those exercises?

MINISTER CONROY: Again, it won't be unexpected, but I'm not going to get into the nitty gritty of whether they are there.

HOST: I don’t know if that's particularly nitty gritty. I mean, don't, don't we have a right to know if the Chinese are surveilling this particular exercise?

MINISTER CONROY: Yeah. Well, I'm happy to say that my most up to date information is that they are not observing the exercise. But the exercise hasn't started yet and starts today. I'm being very frank with you that it would be unusual for them not to observe it and we will adjust accordingly. 

HOST: Okay, what does adjusting accordingly mean?

MINISTER CONROY: Well, it means that we will obviously observe their activities and monitor their presence around Australia, but we'll also adjust how we conduct those exercises. People observe these exercises to collect intelligence around procedures around the electronic spectrum and the use of communications. And we'll adjust accordingly so that we manage that leakage.

HOST: So, you're saying if they surveil us, which we expect based on past precedent, that we will use it as an opportunity to surveil them. It sounds very spy movie now, but in order to collect our own intelligence.

MINISTER CONROY: Well, I think it'll be a two way process. But when we conduct these exercises we're always cognisant that they're being observed by people who want to collect information about how we work with our allies, how we communicate with our allies and partners. And you manage that accordingly in a sensitive way. That's what the Australian people would expect our Australian Defence Force to do and we'll continue to do that. But again I'll say that the Chinese military have observed these exercises since 2017 and it'd be very unusual if they didn't do that this time.

HOST: Yeah, okay. I just want to talk about AUKUS and the investment into AUKUS. The US will be looking at what we've done to demonstrate our own readiness. Is it correct that no work has begun at the Henderson shipyards yet?

MINISTER CONROY: No, that's not correct. Are you referring to HMAS Stirling or the Henderson?

HOST: The Henderson Maritime complex.

MINISTER CONROY: Well, the Henderson Maritime complex is not required for submarine rotation Force West. What is required for submarine rotation Force West, which begins in 2027, is upgrades to HMAS Stirling, where our submarines are based and where US submarines will visit. We've invested billions of dollars in upgrading HMAS Stirling and that work is underway. The Henderson Maritime precinct is about where we would maintain our submarines when we receive them well into the 2030. So, they're two separate timings. The one we're focused on now is HMAS Stirling. 

HOST: Okay. Former US Navy Secretary Richard Spencer has warned that Australia needs to move quickly on both of those sites to ensure they're ready to go by 2027. Is there any case given we are now going to be reviewed and that's imminent by the US to accelerate both of these sites to perhaps be ready to offer something if we want to hold on to AUKUS.

 MINISTER CONROY: Work is going well at HMAS Stirling. In fact we had a US submarine dock the there last week and received some maintenance. We've had very successful maintenance activities of US Submarines and importantly that facility at HMAS Stirling will contribute 1800 maintenance days over the five years of SRF-WST, which is 1800 maintenance days that the US won't be needed to give in their own maintenance basis. Henderson is going through a consolidation process, but again that is not required until the 2030s, late into the 2030s when we need to maintain our Virginia class submarines. HMAS Stirling is the immediate activity, and that’s where we’re investing billions of dollars right now. 

HOST: The Pentagon as you know there was a report this week, is considering adding extra costs and conditions on the AUKUS deal. Will we be prepared to pay more?

MINISTER CONROY: Well, again I'm not going to speculate about hypotheticals, about a review that hasn’t been delivered. 

HOST: Is this so important to us that we are there's no Plan B. The, the Defence Minister made that clear. If there's no Plan B, will we be prepared to spend more?

MINISTER CONROY: Well, let's see what the review finds. I'm confident it will support AUKUS, just as our review of AUKUS found that just as the UK review of AUKUS found that it's in the national interest of all three countries, it will contribute to deterrence as well as grow 20,000 jobs in Australia. Let's see what the US review comes forward with and then we'll react accordingly. But we are investing in the US industrial base to release submarines just as we're investing $30 billion in our own base to build nuclear powered but conventionally armed submarines and grow 20,000 jobs.

HOST: Okay, so open question. Have you been briefed yet if the report is ready to go? Because I think that time frame has lapsed.

MINISTER CONROY: Well, again there's been lots of speculation about what the time frame is for the review. That's a question for the US Government. My last information is that the review has not been completed yet. We're engaging at senior levels, as you expect us to do. So, when we'll continue to do that.

HOST: Of course, spending on defence has been a big question mark and whether we're prepared to spend more. I've got, got a broader question. Do you think it's, it's worth counting soft diplomacy, the money you're expending in for instance, the Pacific, in the broader suite of kind of the broader spending we're doing and defence and related soft diplomacy projects? Is that the way we're framing it? When we talk to the United States?

MINISTER CONROY: We're making the point to everyone that both are incredibly important. PM Albanese, in his current oration, for example, made the point that we're investing in our relationships in the region as well as our military capability. And we are increasing our defence budget very significantly. The largest peacetime increase in the defence budget ever. $57 billion over the next 10 years above the previous trajectory, including $10 billion over the next four years. That's a massive investment that is delivering additional capability right now. And we've been very open with the Australian people that we’ll approach it in that way.

HOST: And do you expect that we will have to spend more?

MINISTER CONROY: Well, from the PM down, we made it clear that the way we'll do that is if a case is made for more capability, we will invest more. We're increasing it by 57 billion, the defence budget. But what we're not going to do is pluck a figure out of the air and and then work out how to spend it, which is what the coalition took to the last election. And the Australian people were very clear that they preferred our approach, which is make a case for additional capability, then invest it. That's a sensible way and that's how we're doing the $57 billion of increased defence.

HOST: You're the Defence Industry Minister. That's all about the money we spend on the enormous things that we spend money on in defence. Procurement has been a perennial problem in defence. Value for money, overruns, delays. Is part of your concern that in essence we do this quite badly and you are reluctant to spend more?

MINISTER CONROY: Well, it's a challenging area for every country around the world. These are the most complex, sophisticated projects any government attempts. And it was pretty problematic under the last government. We've made reforms already. We've made significant reforms to how we do defence procurement and that's improved the process. But we flagged that we want to do more in this area. We will be reforming defence to a greater extent because it's important that taxpayers have confidence that every single dollar goes to improving the capability of the Australian Defence Force as well as supporting the 100,000 Australians who work in that industry every day.

HOST: Now the Treasurer told us last week there was an urgency in getting some clarity on this 200% tariff on our pharmaceuticals. Do you have the clarity yet again?

MINISTER CONROY: We're still engaging with the US Administration. There's questions about timelines for that. So, we'll keep engaging and we'll keep arguing for no tariff for our pharmaceuticals and arguing very strongly in our national interest.

HOST: Has there been any clarity from them since there was an urgency put on finding out about this?

MINISTER CONROY: Well, we've been very clear that we won't be sacrificing or making changes to the Pharmaceutical Benefits Scheme or any other policy. We’ll always act in our national interest and will always argue that these tariffs are not a friendly act and they're an act of economic self harm to the United States.

HOST: Is it also not a friendly act to not get an answer when you ask it? Because it seems there is a delay in even getting clarity about some of these tariffs.

MINISTER CONROY: Well again, we'll keep pushing for that information.

HOST: Must be frustrating though.

MINISTER CONROY: Well again, I'll leave that to someone else to answer. But we'll keep articulating in our national interest in saying that this does harm to the US consumers and business community and it's inconsistent with our free trade agreement.

HOST: Just want to end on the big anti Semitism report. Which of course landed in the government's hands to act on. The big debate that seems to have emerged from it is the definition itself. Do you consider a view which is that Israel shouldn't exist, it should be one state, for instance, with equal rights. That's a lot of the protest movements call, for instance. Is that anti Semitic, that view?

MINISTER CONROY: Well, like all Australians, I've been appalled about the rise of anti Semitism since October 7th. And that's why we've taken a huge range of actions that you know about regarding the Siegel report. We've welcomed it and we'll consider it and come back with our response on.

HOST: The question specifically that I put to you. Do you consider the view that Israel shouldn't exist to be anti Semitic?

MINISTER CONROY: Well, we support the International Holocaust Memorial's definition of anti Semitism. Our position on Israel is that there should be a two state solution with both states.

HOST: That's your view. But protesters might say something different. Do you think it's their right and that that's not anti Semitic?

MINISTER CONROY: Well, we've made the point that you can have views about the Middle East without resorting to racist language. And our position is a two state solution with two states with secure borders, with civilian lives being respected.

HOST: But is it racist for someone to call for one state?

MINISTER CONROY: Well, again, I'm not going to get into that. I'm not a lawyer, but I will say that our position is that there should be two states. We support the International Holocaust Memorial's definition of anti Semitism and. And people can have a view about the Middle East conflict without resorting to racist language.

HOST: Pat Conroy, it's been a pleasure to have you on Insiders with me this morning. Thank you.

MINISTER CONROY: My pleasure.

ENDS