Television interview, Sky Afternoon Agenda

SUBJECTS: Defence capability and delivery, AUKUS

TOM CONNELL [HOST]: There’s been a major announcement in Defence, it's been the biggest overhaul in terms of capability in 50 years. Joining me is Assistant Defence Minister, Peter Khalil. Thank you for your time.

So we're told not cutting, it's not a cut, it's not a spending cut, not a single job goes, nothing about this is about saving money?

PETER KHALIL [ASSISTANT MINISTER]: Yeah, Tom, this is a significant reform, that's not about what you've just mentioned, it is all about the fact that because we are   we're spending, you know, we're increasing defence spending by $70 billion over the decade, it's the biggest increase in peacetime, we're making this massive reform of the way that we go about doing capability acquisition and sustainment, because frankly, we're not in benign strategic circumstances anymore, acquisition of capability, sustainment of capability has become far more complex.

And so by the defence delivery agency, by bringing in together the three elements; CASG, GWEO, and the NSSG, is all about streamlining and strengthening the acquisition and sustainment for these complex capability acquisitions.

CONNELL: Yeah.

KHALIL: And that is really, really important, because we've got to be able to do it efficiently, we've got to be able to do it effectively, and we've also got to be able to do it to make sure we've got value for money for taxpayer dollar.

CONNELL: What about accountability on that front, because with some simpler projects, we've seen some fairly spectacular cost blow outs and stuff ups in defence over the years. So if there's a future project that is seen as a really poor use of money, are we going to see this Head of Armaments role, that person to be found responsible? What happens then? Who's responsible now    

KHALIL: Yeah.

CONNELL: -- if a project is, there's a major blunder in it; whose job goes then?

KHALIL: And this is the good thing about this significant reform, because it is about accountabilities, about streamlining, it's making sure that the budget processes, I guess the delivery of those major and complex capability programs are done in a way where there's better project and budget management where there is a better cost estimation, where there's better assurance right across the life of these projects, and that means a clearer sense of accountability.

Now this agency will be reporting to the Ministers responsible, it will have, as you mentioned, the Director of National Armaments    

CONNELL: Yes.

KHALIL: -- I think is the terminology.

CONNELL: I knew you'd know it.

KHALIL: Well, I'm glad I do. But I think the important thing there is that it provides that sense of assurance, so efficiency always    

CONNELL: Assurance is great, but what accountability? In the future if there's a huge stuff up, another embarrassing one about frigates, or whatever it might be, I remember one where helicopters didn't fit on a Navy ship years ago, will we clearly be able to say, well, this was streamlined, this was meant to be efficient, it's the Minister and the Director of Armaments, so they need to be held responsible?  

KHALIL: Your focus on accountability is an important one, and I think that's part of this package of reforms, because as the DPM said in the press conference, we can always do better, there were huge costs blow outs particularly under the previous 15 years under the previous government.

CONNELL: Well, it's a long held tradition, I'd argue, in Australian politics.

KHALIL: And yeah, you can make that argument that there's been these blow outs on defence budgets for time immemorial, so as a government we are seeking do better on this, and I think that accountability is a big part of that.

CONNELL: So you'd agree that this is    

KHALIL: And the then the other thing is    

CONNELL: -- this is simpler now, if there's a big stuff up, there's a Minister and the person directly under them that should know all of what's going on, and if they have approved it, well, they're responsible.

KHALIL: The agency is responsible to the Ministers and will be reporting to the Minister.

CONNELL: So where would responsibility rest in a major project blow out?

KHALIL: Well, in Westminster system and responsible government, responsibility always is part of the Government, it's the Government, the Government is responsible.

CONNELL: Okay.

KHALIL: We make the decisions, we make the important strategic decisions    

CONNELL: Okay.

KHALIL: -- and that's what this is about.

CONNELL: So in terms of AUKUS though and the cost of it, there's been numerous reports of ships unavailable to go out and do surveillance, whatever it might be, because of AUKUS. Is that happening?

KHALIL: Well, I don't know where you got that information from. You know, we conduct operational efforts, if you like, as a standard practice with respect to, if you're talking about surveilling and our operational tempo    

CONNELL: The availability of ships, it all costs money. Are there any    

KHALIL: There are a number of them.

CONNELL: Have any of them ever been reduced because we need to find efficiency and save money for AUKUS?

KHALIL: There are a number of variable factors when it comes to operational tempo, there are many, many factors, one is    

CONNELL: But I'm asking if one of them now is cost?

KHALIL: Well, I'm telling you, any of these decisions are made by operational commanders around maintenance, things sometimes things go wrong with ships that you've got to fix, and all the rest of it.

CONNELL: Yeah.

KHALIL: So that's a normal part of defence business.

CONNELL: But defence budgets, whether it be that surveillance or outsourcing, consulting    

KHALIL: Well --

CONNELL: -- are there requests and limitations and cut offs right now that say, "we need to afford AUKUS, sorry, cut that by 10 per cent?"

KHALIL: I can see where you're trying to go is, and I'll tell you this and your audience as well.

CONNELL: Well, this is just things that   well, these are things I've been told. All I'm asking, is it true?  

KHALIL: What things have you been told, I'm not sure you've been told.

CONNELL: Well, I have.

KHALIL: But the really important point in response is, and this is a fact, we have increased defence spending it record level, a record level of increase, 70 billion, and that is the biggest increase in defence spending since peacetime. We are    

CONNELL: Inflation suggests you'll always increase it in dollar --

KHALIL: Investing in - we are investing --

CONNELL: -- terms -- that's not answering the question of whether there are limitations, on whether it be outsourcing, maintenance, ships available at sea, because it's all about AUKUS now.

KHALIL: You're making a very kind of false dichotomy there, Tom, between   and you're conflating two different things. When we're talking about defence spending, defence spending goes to, clearly, acquisition of capability, assets, if you like, new ships, new drones, new so on. And we're making massive investments in that space.

Defence spending also goes to operational matters, and those operational   that operational tempo, if you like, is determined by a number of variables of factors, including maintenance and sustainment, and so on, and we're investing in all of that as well.

These are record levels of investment. The other mob, when they were in government did a lot of talking and a lot of press releases without much backing up with actual dollars. We are investing in defence, and importantly, in the kit that is important for our ADF men and women to do their job and protect Australia's national interests.

CONNELL: I'm not conflating though, I'm asking if one is affecting the other, if spending on AUKUS is affecting the day to day running of defence?

KHALIL: Well, spending on AUKUS is actually part of the important commitment that we've made to new capability. We're talking about capability, very complex technological capabilities that we're   whether it's Pillar II as well of AUKUS, which includes things like AI and autonomous uncrewed vehicles, whether it includes electronic warfare, all these things are very cutting edge, and we're making that commitment to that spending, and that's a really important commitment.

CONNELL: But that's the thing about it, that's going to be harder to change, the AUKUS spending, we can't, you know, take 10 per cent off the cost of a sub, it's not possible, so as a result, is other spending copping it in the neck because AUKUS has to be    

KHALIL: Well, I wouldn't characterise it like that, Tom, and I think the spending has increased, as I said, spending has increased with respect to acquisition of capability and spending has increased on some of our operations as well. The more we do in terms of operations, that we have to respond to natural disasters or humanitarian issues, or we've got exercises that we do, we have provided that spending so that our ADF can do their job.

CONNELL: Okay. Peter Khalil, I appreciate your time.