Press Conference, Canberra

SUBJECTS: Australia’s future general purpose frigates; AUKUS; Indigenous affairs; Australia-Fiji relationship

RICHARD MARLES, DEPUTY PRIME MINISTER: Welcome everyone. The Government today is announcing that we are down-selecting Mitsubishi Heavy Industries’ Mogami-class frigate as the preferred platform for Australia’s future general purpose frigate. This decision represents the biggest capability acquisition decision that the Government has made since announcing the optimal pathway to acquiring our future submarine capability, back in March of 2023. When our Government came to office, we inherited the oldest surface combatant fleet that the Navy had been operating since the end of the Second World War. And there were no plans to introduce a new surface combatant into service until 2034, which would be the first of the Hunter-class vessels. Now, the capability gap that this represents was identified in the Defence Strategic Review and in turn it was considered in the Surface Fleet Review. And as a result, when we announced that review at the beginning of last year, it had in it a recommendation, which the Government accepted, to put into service, into our Navy, a new class of vessel: a general purpose frigate. Eleven frigates, three of which would be built overseas, the remaining to be built in Australia. And this frigate was really at the heart of the very significant increase in surface combatants in our Navy. But importantly, it was the pathway to having a much earlier entry into the Navy of a future surface combatant, with the first coming into service by the end of this decade. And that’s why the Surface Fleet Review was very emphatic about the need for this to be based on a mature, existing design, and for the first of these frigates to be built overseas. The Surface Fleet Review recommended four designs that could be considered. In fact, ultimately we considered five. At the end of last year, we down-selected to two: that was tkMS MEKO-class frigate, which is currently built in Germany, and Mitsubishi Heavy Industries’ Mogami-class frigate, which is built in Japan. And then today, we are making the announcement of down-selecting to the Mogami-class vessel. Let me say how grateful we are to TKMS for the efforts they have put in in bidding in this tender. The MEKO-class frigate is a very impressive capability, and it was certainly looked at very seriously. And the tender that was put forward, or bid that was put forward, by tkMS was very professional. That said, the Mogami-class frigate is the best frigate for Australia. This is currently a frigate which is in service in the Japanese Maritime Self-Defense Force. They operate the Mogami-class vessel. It is a next-generation vessel. It is stealthy, it has 32 vertical launch cells capable of launching long-range missiles, it has a highly capable radar, it has a highly capable sonar. In that sense, it is genuinely a general purpose frigate, capable of engaging in air warfare and undersea warfare. It has a crew of 90. Now, to put that into context, the class of frigate that it will replace, the ANZAC-class frigate that we currently operate, operates a crew of 170. Yet the Mogami’s displacement is 6,200 tonnes, the ANZAC-class frigates are about 3,500 tonnes. So it’s a much bigger ship, which is able to operate with a much smaller crew, and that’s a reflection of how modern this ship is. It’s going to be really important in terms of giving our Navy the capability to project. And impactful projection is at the heart of the strategic challenge, which is identified in the Defence Strategic Review. To that end, the Mogami-class has a range of 10,000 nautical miles, and that again compares to the ANZAC-class frigates, which have a range of around 6,000 nautical miles. Now, I want to emphasise that this decision is entirely based on the capability of the respective ships. This is a decision that is made about how we can get the best platform, the best capability. for the Royal Australian Navy. That said, having made the decision, this does represent a very significant moment in the bilateral relationship between Australia and Japan. Last night, I had the pleasure of speaking with my counterpart again, Gen Nakatani – the Minister for Defense in Japan. He was obviously very excited about our pending announcement, and of course, we are very excited about the prospect of the Mogami-class vessel coming into the Royal Australian Navy. Our relationship with Japan is growing from strength-to-strength. There is no country in the world with whom we have a greater strategic alignment. And that is being reflected in a really blossoming defence relationship. The Reciprocal Access Agreement between our two countries is now seeing us operate more and more from each other’s bases. We are doing more operations and exercises together. You’ve seen that with Talisman Sabre. You see that with the announcement that we made last November with the United States, to see servicemen and women in Japan’s Rapid Deployment Brigade, Amphibious Rapid Deployment Brigade — as part of their Japanese Self-Defense Force, doing joint training with the US Marines and the Australian Defence Force in Darwin. But with this announcement, what we see is a really significant defence industry dimension to that relationship. This is clearly the biggest defence industry agreement that will ever have been struck between Japan and Australia. In fact, it’s really one of the biggest defence exports that Japan has ever engaged in. And as I say, it is a very significant moment in our bilateral relationship. Finally, can I just thank all of the men and women in the Royal Australian Navy, the ADF and the Department of Defence who have put a power of work into this tender process. This announcement that we are making today is actually being made months ahead of schedule, and that’s because we are really cognisant of the need to get this ship into service as quickly as possible. But to get to this point, there has been a power of work done. I really want to thank all of the officials for the work that they’ve done, as well as of course, the Minister for Defence Industry. The result of this is that we get to today, which is really a very, very significant day in the history of the Royal Australian Navy.

PAT CONROY, MINISTER FOR DEFENCE INDUSTRY: Thank you, Deputy Prime Minister. And I’ll begin by thanking both tenderers for the high-quality tender they both put in, and the cooperative spirit they engaged with the Department of Defence as we moved at speed to make this decision. But, ladies and gentlemen, in terms of cost, capability and meeting our schedule of delivery – the Mogami-class frigate was the clear winner. The cost of acquisition of all three designs examined was comparable, but over the whole of life, the cost of the Mogami is much lower. The Mogami-class stealth frigate is in production right now. It was the only option to meet the Government’s timeline of the first frigate being delivered in 2029 for service in 2030. It also meets our operational needs when considering the environment, the seas and oceans, in which it’s more likely to be deployed. And it offered the best option in terms of capability. It takes our general purpose frigates from being able to fire 32 air defence missiles – as the current ANZAC-class can – to 128 air defence missiles. The new stealth frigates will also have the ability to fire SM-2 and SM-6 missiles, the most advanced air and missile defence weapons in the world. These missiles, which are also being deployed on our Hobart-class destroyers and on our future Hunter-class frigates, will enable the Navy to strike maritime, land and air targets at long range. The Mogami-class frigate will also have the ability to fire Tomahawk cruise missiles, giving the Navy more vessels that can strike at longer distances — and taking our general purpose frigates’ strike range from 275 kilometres to 2,500 kilometres, an almost tenfold increase in strike range. Importantly, and critical to the delivery of this capability, the Mogami-class frigate was also the most interoperable with other ADF assets – most interoperable. Today we’re also announcing the imminent execution of a strategic shipbuilding agreement with a newly established strategic shipbuilder, Austal Defence Shipbuilding Pty Limited. This will secure a continuous pipeline of shipbuilding work and will create thousands of jobs at the Henderson precinct in Western Australia, which is being consolidated around the construction of Landing Craft Heavy and Landing Craft Medium. This successful consolidation will allow Mogami production, as the DPM said, to be transferred to Henderson after the first batch of three frigates are built in Japan. I’d also like to stress that there will be no changes to the Mogami-class frigate design other than the translation of the combat management system and regulatory changes required under Australian law. Those later changes can only be approved by the Secretary of the Department and the Chief of the Defence Force, in consultation with myself and the Deputy Prime Minister. This is a lesson we’ve learnt from previous acquisitions and guarantees speed to capability. This will help make good on our commitment to deliver four times as many warships in the next 10 years compared to the Coalition’s plan. And I’m confident in saying that the Mogami-class frigate is one of the most advanced general purpose frigates in the world, including in terms of low observability. So today, ladies and gentlemen, the Australian Government is announcing the acquisition of stealth frigates that will make our Navy a bigger Navy and a more lethal Navy. It will transform our Navy into a more lethal and bigger Navy. This will reassure our allies, deter our adversaries, and make Australia safer.

JOURNALIST: Can you just provide a bit of a breakdown, please? You expect the first of the three to be delivered in 2030. When do you expect, sorry, 2029 into service in 2030. When do you expect the other two built overseas to come into service? When do you expect the first one to be built in Australia? And just that new shipbuilding company with Austal, what's the composition of the shareholder structure of that?

MARLES: So, the first of the three gets delivered in 2029, comes into service in 2030 – and I think the third will be in service by 2034.

CONROY: Yeah, that's correct.

MARLES. So, the three happen over that period of time. As I indicated, and as we announced with the Surface Fleet Review, the intention is to have this class of vessel fundamentally built in Perth at the Henderson Defence Precinct. That's really at the heart of the continuous naval shipbuilding proposition that we have put forward and that we announced with the Service Fleet Review as part of what will happen in Perth. We want to do that as soon as possible and we see that as occurring after the third ship. It is contingent on the Henderson Defence Precinct being ready, but we're confident that it will be ready and there's a lot of work going on in relation to that. I might defer to Pat in terms of the second question.

CONROY: Yeah, in terms of your second question, the Austal Defence Shipbuilding Australia Pty Limited is a subsidiary of Austal. Importantly, the Commonwealth Government will have a sovereign preference share within that organisation that will allow us to exercise certain rights should we need to do so.

JOURNALIST: Minister, you haven't mentioned any numbers today. You just said it was relatively common… the base cost. Can you give us an indication of the cost, given that cost blowouts on the Hunter frigate was horrific. And on that basis, and I noticed that you're not making any major changes to the original design – but what is the combat system and what is the radar system, if it's not CEA and Aegis?

CONROY: On the latter, it is an indigenous Japanese radar system and the combat system is actually a Lockheed Martin product. So, it's a US product that Japan acquired for the construction of the Mogami-class. So, it's got a lot in common with other combat systems used by us and the United States. So, that answers your second question, in terms of cost – the cost for this acquisition is consistent with what we put forward in the release of the 2024 IIP, Integrated Investment Program, where we've allocated $10 billion over the decade for the acquisition of the Mogami-class frigates.

JOURNALIST: Is that for three or for eleven?

CONROY: This covers the first 10 years of expenditure for this programme.

JOURNALIST. So, what does that mean per ship? Because you had the Hunter class started at roughly about three to four each, and it became about $9 billion each for three.

CONROY: Well, we're yet to begin detailed negotiations – that kicks-off right now prior to contract signature. So, I'm not going to undermine the Commonwealth.

JOURNALIST: Can you give us an estimate?

CONROY: I'm not going to undermine the Commonwealth’s negotiating position by talking about figures. But what I can say to you is that we are very confident that the cost over the next 10 years will be within the $10 billion IIP provision.

MARLES: And can I say – that is the critical point. So, in the IIP, we allocated $55 billion over the decade for the surface fleet, of which $10 billion is for the general purpose frigate. We will obviously be going into a process now of negotiating a contract with Mitsubishi Heavy Industries. So, it is really impossible to go into the specifics because we need to go into that…

JOURNALIST: But $10 billion gets you how many in that period?

MARLES: $10 billion provides for the capability over the 10 years, and that's the way in which we engage in the budgeting here. And we're confident that we will be able to meet the allocation over the next 10 years. And obviously, as we go forward, what we do with the Integrated Investment Program now is every two years we update it and we'll do so accordingly to take into account the years going forward after that. But we're confident this will meet the provision in the IIP. But beyond that, it's impossible to go into the details because this is now a matter to be negotiated with Mitsubishi Heavy Industries.

JOURNALIST: There's been a lot of speculation in the defence sector that the Department itself recommended the German bid on cost and time frames and that the NSC might override that. Is that the case? And just to Andrew's question, do we know how many will be acquired over the 10-year period or is that – can you just not answer that?

MARLES: So, firstly the Mogami is the best ship. That's the recommendation and that's what NSC has decided.

JOURNALIST: Is that the recommendation from Defence?

MARLES: The Mogami is absolutely the best ship and that was very clear in all the advice that we received. The numbers that will be acquired over the next 10 years are there in the schedule. We get the third by 2034. The plan is to build 11. That's what we announced when we announced the Service Fleet Review at the beginning of last year and that remains unchanged. And again, the first of these is going to be built overseas to get a speed into service. But we want to move the build of this as quickly as we can to the Henderson Defence Precinct in Perth.

CONROY: And if I can just refer to my earlier statement on cost, capability and schedule, the Mogami was the clear winner on all three factors. It was the clear winner and the source evaluation reports reflected that.

JOURNALIST: Minister, you mentioned before and I guess this kind of goes to the cost question as well. This is the biggest thing… Japan hasn't really done this before – selling defence material of this type overseas in this nature. How confident are we that they can actually get this done in the time? How much ramping up needs to happen in their industrial base? And on your comments about if or when the Henderson Precinct is ready, I mean when can we expect some more substantial updates about what's going to happen there and when?

MARLES: Well, I’ll start and Pat might want to add to this. I mean Japan is one of the most high-tech industrial bases in the world – and we are really confident about Japan's capability to deliver. I think an important part of the assessment of the bid was that the capacity of Japan, their industrial base to meet the expectations that we have in relation to this delivery – and again Pat might want to expand on that. In terms of Henderson, a lot of work is being done on the development of the Henderson Defence Precinct. You'll remember that, with the Premier Roger Cook, we announced the establishment of the Henderson Defence Precinct at the end of last year. We will have more to say on that shortly.

CONROY: Just on those two questions, the Japanese, or Mitsubishi Heavy Industries rather, have already constructed 11 Mogami-class in their production line. They are building the twelfth right now. We're acquiring the upgraded Mogami-class frigate and the Japanese Government has allocated three production slots for us. Production has begun on the upgraded Mogami-class frigate. So we’ve got great confidence – and this was an intentional acquisition strategy of the Australian Government to access an established production line and not change it. Let me repeat that – using an established production line and not changing the frigate other than translating the combat system and any changes required by Australian law is how we get speed to capability and how we can stand up here and say the first one will be delivered in 2029, in only five years' time, and will be in service in 2030. We have learned from the mistakes of the Coalition government around their acquisitions and are determined not to repeat them. In terms of the Henderson consolidation, a key milestone was announced in the execution of the Strategic Shipbuilding Agreement which we announced today. We are progressing on Landing Craft Medium and identified the design for Landing Craft Heavy. Those projects are proceeding at speed as well.

JOURNALIST: Part of that $10 billion, are we sending any money to Japan to prop up their industrial base, similar to AUKUS? While I have you, can I just ask, going back a little bit when the Fijian PM Rabuka was here, are we negotiating a defence treaty with Fiji? And are we open to taking their personnel in our Australian Defence Force? He said he would offer up to 5,000 to plug our shortages?

CONROY: We envisaged this would be a normal contractual relationship between the Australian Government and Mitsubishi Heavy Industries, obviously backed by the Japanese Government. We're not contemplating any of the things you talked about.

MARLES: We are continuing to build our relationship with Fiji which is obviously a very strong relationship in the first place. And we are doing that in the context of our defence-to-defence relationship. It is one of the three countries amongst the Pacific Islands with PNG and Tonga which operates a defence force, and there are very strong links between ourselves and the Fijian Defence Force now. I won't directly answer the question in relation to personnel, other than to simply say that when we announced the fact that we would be opening recruitment into the ADF, firstly New Zealand and than Five Eyes Countries, we did reference the fact that we had an eye to the Pacific in the future. I would just reiterate that. I wouldn't go into any further specificity, particularly in relation to Fiji, but just to make that comment. But we continue to work very closely with Fiji in terms of developing and updating our defence relationships.

CONROY: We have publicly welcomed Prime Minister Rabuka’s desire for a treaty and a commitment to expand the already elevated and renewed Vuvale relationship. 

JOURNALIST: Deputy Prime Minister, Indigenous community representatives are appealing for the Commonwealth to restrict some funding to the NT Government, money that is being spent on justice measures that could widen the gap on Indigenous disadvantage. What's your Government willing to do?

MARLES: Look, I mean, obviously we work very closely with the Northern Territory Government in relation to these issues and we will continue to do that. Malarndirri McCarthy is utterly focused on doing everything we need to do as a government to meaningfully Close the Gap. That sentiment is very much at the heart of what the Prime Minister articulated at Garma on the weekend. But we will continue to work very closely with the Northern Territory Government.

JOURNALIST: Local elders are saying that children are being treated like animals in the prison system there though, what’s your response to that? Surely the Federal Government has some role to intervene and stop funding for things like this?

MARLES: We are very mindful of these issues, and we will work very closely with the Northern Territory Government in respect to all of them.

JOURNALIST: You mentioned strategic alignment with Japan, to what extent did that influence this decision and how does it reflect shared concerns about the military rise of China?

MARLES: So there's a very clear answer to the first part – it didn't influence it at all. As I said in my opening, this decision was made based on what was the best capability for Australia. And that was very clearly assessed to be the Mogami-class frigate. I really want to emphasise that point. This was a capability-based decision. We do have a very close strategic alignment with Japan. There's no other country in the world that is quite as aligned with Australia as Japan. And based on a very significant level of trust which exists between our two countries, has seen the relationship really grow from strength to strength. In the context of our strategic partnership, at a more granular level the Reciprocal Access Agreement which really is seeing us operate much more closely together. And we look for opportunities to do more operations and exercises together which is reflective of what I mentioned earlier about the joint-training opportunities in Darwin with the Amphibious Rapid Deployment Brigade from Japan and the US Marines. We will continue to look at that. I think having made the decision, this does definitely represent a big step in the relationship between ourselves and Japan, but it is not the reason why we made this decision.

JOURNALIST: But does it reflect mutual concern about China?

MARLES: Well, because it’s not the basis on which we made the decision – I don’t think it reflects anything. What it reflects is that the Mogami-class vessel is the best vessel for the Royal Australian Navy. We really want to be clear about that. That is the only thing that is reflected in the decision that we are making now. Separately, but obviously this is a big moment in the relationship between Australia and Japan, we have a strong strategic alignment with Japan and we continue to look for opportunities to work more closely together.

JOURNALIST: Just a technical question, did the Department recommend the Mogami to you?

MARLES: The Mogami-class vessel is the best vessel here – and we are acting on advice.

JOURNALIST: So no?

MARLES: Actually, I think I answered that question completely the opposite of what you just said.

JOURNALIST: Has the Government completed its submission to the US AUKUS Review and what is your latest understanding of the timing of the outcome of that review?

MARLES: We are working very closely with the United States in relation to the Review – we are working very closely with them in respect of our contribution to the Review and we will make a contribution to the Review as we have said. The United States have been clear in what they have articulated as the timing of the Review. I feel like it’s really for the US to describe this. And so I won’t add to what they’ve already said in relation to it. But to give you a sense of assurance, we are working very closely with the US in respect of it. And I just go back to what we’ve previously said – we welcome this Review. It is a perfectly natural step for an incoming government to take. It’s one we took, it’s one the Brits took when the British Labour Government came into power in July of last year. It’s assessing how best we can move forward with AUKUS to the mutual interest of all three countries – and we think this is a really good opportunity to fine tune where AUKUS is going, but also to demonstrate the significance of AUKUS to the strategic benefit of Australia, the United Kingdom and the United States.

ENDS