Television Interview, Sky News - Sunday Agenda

SUBJECTS: Defence Estate Audit; Interest Rates; Economic Management; Tax Policy; Board of Peace; AUKUS; President Herzog Visit to Australia. 

HOST, ANDREW CLENNELL: All right, well joining me live is the Deputy Prime Minister and Defence Minister, Richard Marles. Richard Marles, thanks so much for your time. I might start with why do this fire sale of Defence assets that was announced during the week? AUKUS, the nuclear submarine program, is going to cost $400 billion. We're regularly handing billions to the Americans before we see anything from that. The NDIS is $50 billion a year and rapidly climbing. All you're getting from these sales is $2 billion at most, and you'll save $100 million a year on maintenance. So, is it worth it?

DEPUTY PRIME MINISTER, RICHARD MARLES: Well, every dollar counts, Andrew, is the first point. And I'd also point out that this has been a work in progress now for some time, we actually did the Audit of the Defence estate back in 2023. Look, the issue here is that we need a Defence estate which is really focused on the future needs of the Defence Force. Recognising that the Defence Force is- its primary job is defending Australia. It's not a heritage organisation, it's a defence organisation. And so this is as much about the focus of our personnel. So, to give you examples, you know, we're spending $4 million, or we have over the last four years, securing Spectacle Island in Sydney Harbour, a site where there hasn't been a member of the Defence Force since 2023. Now, there is the $4 million that is being spent there, and that is just a complete waste of money, clearly. And you would be very quick to criticise the Government for wasting $4 million. But it's also the personnel that are involved in managing all of that, which is their time. And we've got people working at sites which are not really fit for purpose in terms of what their job is. If you look at the operation commands of the three services – the Forces Commander, the Fleet Commander, the Air Commander – they're all in the Sydney Basin, but one's up in the Blue Mountains, one's at Fleet Base East at Garden Island, the other is at Victoria Barracks. There's real opportunity to consolidate all of them. That's what makes sense in terms of having a much more coordinated and joint force. This reform allows the opportunity to do that. So, this is meaningful reform. It's as much about making sure that the estate is properly being the foundation that the Defence Force needs it to be in order to do its job. But it is also the case that if we don't do anything here with the existing properties, we're facing a $2 billion bill in maintaining properties that we don't use over the next 25 years, and frankly that kind of waste has to stop and we've just got to stop doing things which don't make any sense. And it's taken, you know, a long time to get to this point. I'd point out that in the nine years of the Abbott-Turnbull-Morrison government the Coalition did nothing in respect of this. And right now in the context of all that they are saying about government spending, they are opposed to this reform as well, which says everything about the way in which the Coalition actually goes about the management of money.

CLENNELL: Well, is Defence broke partly thanks to AUKUS?

MARLES: No. I don't accept that proposition at all. If we’re going to talk about defence spending, Andrew, in the last three and a half years since we've come to government we've injected $70 billion over the course of the decade in new defence spending. Now to put that in context, during the nine years of the Abbott-Turnbull-Morrison government they injected about $10 billion over a decade in terms of additional defence spending. So, the like‑for‑like comparison is that in the last three-and-a-half years we've done seven times as much in terms of increasing defence spending as what the Abbott-Turnbull-Morrison government did in nine years. We are dramatically increasing spending on defence. It is the biggest peacetime increase in defence expenditure in our nation's history. And that is reflected in terms of what we are doing in relation to AUKUS. But it's also reflected terms of what we're doing in greater investment in relation to long distance strike missiles. It's much greater that we're doing in relation to providing for an amphibious Army. I mean we, are across the board, increasing our capability and that includes for example investing in our northern bases which is really where the estate needs real investment, which we are already doing, which is increasing the distance in which our Air Force can project. And they are all capabilities which go beyond AUKUS. So, we are spending money on the Defence Force–

CLENNELL: Has the Treasurer leant on you to find some savings, and this is where we're at? The Prime Minister and Treasurer?

MARLES: Well, again, look at the timeline here Andrew. We commissioned the Defence Estate Audit back in 2023. What that came from was conclusions that were drawn out of the Defence Strategic Review that we did in 2022 and 2023– literally the very first step that we took in coming to office back in 2022. I mean the origins of this are that the Defence Strategic Review put a real focus on our northern bases and bases in the west, which includes HMAS Stirling in Rockingham in preparation for the Submarine Rotation Force–West. But that arc of bases from Cocos Keeling Island through Western Australia, the Northern Territory and Scherger, which is at Weipa, these are the critical places that we need to be investing. That in turn really demanded the question about looking at the entirety of the Defence estate. If they are the bases that we need to be focusing on, an obvious question is, well, why do we have so much property that we're not using down south in the middle of our capital cities? And the answer to that is, you know, a historical legacy. It was that which led to me commissioning the Defence Estate Audit, which was, you know, an incredible piece of work but at the same time really damning in terms of lack of action in governments past to deal with the Defence estate.

CLENNELL: This is going to get you some backlash from the Defence community though. Here's a letter from a long serving digger to the Liberal MP and veteran Andrew Hastie during the week. It reads, ‘I write to you today with deep concern and a profound sense of disappointment following the recent announcement regarding the divestment of Victoria Barracks, Sydney. This decision feels like a fundamental breach of the implicit contract between the Australian Army and its long serving personnel under the banner of enhancing future estate capability. We appear to be sacrificing one of the strongest and most enduring links to our military history simply to offset past bureaucratic shortcomings including excessive rental expenditures and funding pressures related to major projects such as the submarine program’.  And you've also had resistance from the New South Wales Government. Victoria Barracks, a place where dignitaries can be met, etcetera, a place that's important, it seems, to the Army's heart. So, what's your response to that pushback?

MARLES: These are difficult decisions and I certainly understand the emotional attachment that a lot of people in the Defence Force will feel to the various Defence sites of which they have been a part. We completely get that. The Defence Estate Audit talked about the fact that Defence today bears the burden of a legacy of indecision. It talked about a lack of political and organisational will to meet challenges. And I'm literally quoting from the Defence Estate Audit. And these are the challenges that those who have sat in my chair in the past have faced. And in the face of that they have done nothing. And so this is a difficult step to take. But here are the facts; you want to talk about Victoria Barracks, Sydney – it is a third empty. It is largely a site where we do administrative work and we are faced with something in the order of a $200 million bill to maintain that site over the next ten years, we've spent something like $50 million in the last five. Two kilometres down the road at Defence Plaza Sydney, which is a state‑of‑the‑art modern office building which is fit for purpose for the kind of work that is done at Victoria Barrack Sydney, where we've spent $83 billion– $83 million, I should say, that site is only 40 per cent occupied, it's 60 per cent empty. Now none of this, you can tell, makes any sense, Andrew. And we've got to stop doing things which make no sense. The Liberals didn't have the gumption, or– 

CLENNELL: All right.

MARLES: No, let me finish. The Liberals didn't have the gumption to be able to deal with this. They effectively squibbed this during the time that they were in government. And it's clear from the way in which they've responded over the last few days that if they were the government today, they would continue to squib it. But if I could just say something about the heritage. What we've got at Victoria Barracks Sydney is a property which dates back to 1840. It is an incredible place. It is the longest sandstone building in the southern hemisphere. It is a site that hardly any Sydneysider has ever seen. It's a site that most people have served in the Army have never seen. It sits behind walls. The heritage of that place, yes, it is part of the Army and the Defence Force, but fundamentally that is a heritage which belongs to the Australian people. And that's the point that really needs to be understood. And it's not a good heritage outcome that this building is essentially off limits and not able to be seen by the whole of Australia. Now what will come from this is that these sites will be protected by law, but they will now be opened up in a way that Sydneysiders and Australians more generally can see them and in that way actually celebrate the history of the Australian Army. 

CLENNELL: And obviously sold for housing, at least large parts of them. How long will it take–

MARLES: Well no. No, no– sorry Andrew, if you're going there, what we are doing here is we are transferring this to the Department of Finance in a relatively short period of time over the next couple of years and that is so that Defence does realise the benefit of this quickly. But from there, as the specialist asset manager of the Commonwealth, the Department of Finance will take the time required to make sure that there is the proper disposal of this, but there is the best use of what is an iconic site in Sydney for the future. So, whatever its future–

CLENNELL: For housing. 

MARLES: Is a decision to be made, still to be made–

CLENNELL: It is some of the most valuable housing land in the world at Paddington in Sydney there, surely you’re selling it for housing, Richard Marles? 

MARLES: Well those decisions have not been made. Firstly, in terms of the actual buildings that are there, there is a heritage overlay which is completely appropriate. So, by law those buildings will be protected. 

CLENNELL: Sure, sure. 

MARLES: Whatever is the future of that site, it will necessarily open it up to more Australians and more Sydneysiders than what we've got now where it's essentially off limits. I mean if you look across the Defence–

CLENNELL: Okay.

MARLES: If you look across the Defence estate, there are definitely sites within our capital cities which I am sure will lend themselves to housing going forward, I have no doubt about that. But in respect of every specific site, they are decisions to be made by the Department of Finance in due course.

CLENNELL: Well, how long will it take for, you know, for all this to occur, the sell offs, etcetera? It could be a decade, couldn't it? And how much will you have to spend on remedial works given chemicals on some of these sites you're selling?

MARLES: Yeah, look, I mean that's a good question and in a sense comes back to the very first question you asked. I mean this is less about the money that is recovered here and it is much more about making sure that our Defence estate is actually focused on the kind of work that the Defence Force does and we have our Defence Personnel, both in terms of Department of Defence and ADF focused on their job rather than managing properties that we don't need. And some of these sites can be sold pretty quickly. In fact, of the 67 sites that are up for sale, three have already been sold. But there are going to be others and Victoria Barracks Sydney is a good example, which are going to take years, there's no doubt about that. The mechanism that we are adopting here is to transfer all of these properties to the Department of Finance relatively quickly, meaning over the next couple of years, so that the benefit to Defence is realised pretty quickly, but while also providing the space and time needed to maximise the value of these properties to the Commonwealth and some of them are going to take a considerable amount of time. And yes, there will be some expenditure in relation to relocation and in relation to remediation of sites. The Defence Estate Audit, you know, gives some estimates and it's nothing more than estimates, but they estimate that the sale of these properties in aggregate is going to be around about $3 billion. There's probably going to be around about $1.2 billion in expenditure which would realise a benefit to the Commonwealth at the end of the day of $1.8 billion and that's not an insignificant amount of money, clearly. But it is less about that, as I say, than it is about orientating the Defence estate to the needs of the Defence Force.

CLENNELL: Is the Government actively looking at removing capital gains tax discount?

MARLES: Well, I mean this question's been asked a lot, Andrew, during the course of the last week and the answer you're going to get from me today is the same that I've been giving during the week and others have as well. We have a policy in relation to housing which has not changed and that includes the tax arrangements around housing. We do understand that there is a housing affordability challenge and that there is a question of intergenerational justice, really, in respect of this and our strategy for dealing with that is on the supply side, in other words, building more houses. And that is our focus. We need to see more houses in Australia built. That's the whole point of the Housing Australia Future Fund–

CLENNELL: That’s not a no, Richard Marles. That’s not a no. 

MARLES: Well, what we are– we are talking about what we're doing. I mean, people are speculating about a whole lot of things. We are doing– 

CLENNELL: I know what you're doing. I know what you're doing, but you're not answering the question, with respect Deputy Prime Minister. So, is it your position that you're not commenting, you're not going to comment on whether that's being considered by the Government?

MARLES: You've literally asked me a question about the tax arrangements in respect of housing, and I've answered it and said that our housing policy has not changed– 

CLENNELL: No, my question– I'll read my question again. It’s is the government actively looking at removing the capital gains tax discount, yes or no?

MARLES: Our policy in relation to housing and the tax arrangements in respect of it has not changed.

CLENNELL: Might it change–? 

MARLES: And that couldn’t be clearer.

CLENNELL: Yes or no?

MARLES: It hasn't changed, Andrew. And I mean, you can talk about a whole lot of things in respect of what may or may not– our policy in terms of what we are doing is to focus on addressing the challenges in respect of housing by building more houses. So, we haven't changed and our policy has not changed in respect to the tax arrangements. But more than that, in terms of looking at how we deal with this issue, our focus is on building more houses–

CLENNELL: Sure. I mean, such a question– 

MARLES: That’s what we need to do to deal with the question of housing affordability.

CLENNELL: Richard Marles, sorry. Such a drastic change should really be taken to an election, shouldn't it? Because, you know, you had an election not even a year ago and you didn't propose this. So, if you were to countenance such a change, you wouldn't be able to put it in place till 2028, or after 2028, would you?

MARLES: Well, look, there’s a whole lot of speculation in the question that you're asking. We took the policies that we took to the last election, and our policies in relation to housing and the tax arrangements around them hasn't changed. And it's as simple as that.

CLENNELL: Do you accept the Government has contributed to inflation?

MARLES: During the week, it was really clear in the commentary by the Reserve Bank that the primary factor in terms of what's going on with inflation in the economy now is a greater than expected increase in private sector demand. I mean, that is really clear in the commentary that was put out by the Reserve Bank in respect of the decision that they made. Now, the point we would say in relation to all of that is that it highlights the cost of living challenges that are being faced by Australians today, of which we are really cognisant. And it's why, you know, a key focus of this Government, in many ways, the sort of narrative at the heart of this Government since we came to power back in May of 2022 has been to address cost of living challenges. That's why, you know, we put in place income tax across the board, why there'll be another of those this year and another the year after. It's why from the beginning of this year we've capped PBS scripts at $25, why we're cutting student debt, and I could go through a whole lot of other policies– 

CLENNELL: Is all that contributing to inflation on cost of living?

MARLES: They are all focused, Andrew, on cost of living. 

CLENNELL: But is all that contributing to inflation? You know, are we in this vicious circle on that?

MARLES: No, I don't accept that at all. And in this respect, there are challenges in the economy in terms of inflation. The Reserve Bank makes it clear in their commentary in respect of the decision that they took, that we are seeing higher than expected increase in private sector demand. Now, in response to that, the Government has been managing the Budget prudently since the moment that we came to power. And we've delivered two surpluses, something that the Coalition never did. And in the third year, our deficit was much smaller than what the Coalition would have done based on their figures when we came to office. You know, we go to the last election, Andrew, where the Coalition are promising to have bigger deficits than Labor. So, our position is to prudently manage the Budget. But where we are engaging in spending, it is all about helping Australians deal with the cost of living challenges and that is really important.

CLENNELL: Can you confirm the Government won't be joining Donald Trump's Board of Peace?

MARLES: Well, look, all of those are issues that will be worked through. We obviously have said, you know, repeatedly that what the Trump administration have done in terms of seeking to broker peace in the Middle East is something that we very much support. And we want to work with the US administration in relation to the peace arrangements in respect of the Middle East. We need to see an end to the really the human catastrophe that is being played out there. In terms of broader, kind of global architecture, I mean they're matters that we're obviously considering.

CLENNELL: You wouldn't want to be on a Board of Peace with Vladimir Putin though, would you?

MARLES: Well, I mean, look– we will consider questions of global architecture. Obviously the starting point in terms of our sense of the way in which global architecture works is the UN, the United Nations and we engage with the UN, we engage with the UN Security Council, which of course Russia sits on. So, you know, there is global architecture out there. I think before we get to all of that, in the here and now, we have seen the US, I think, play a really important role in brokering peace in the Middle East. That is something that we have supported and we obviously will continue to work with the US and other parties about how we can contribute to that peace in the Middle East. And in terms of broader questions, they're ones that we're considering. 

CLENNELL: Alright, a couple of people have contacted me about a function at Parliament House last week. A PR lobbying firm hosted a $100‑a‑head function for Parliamentary Friends of AUKUS. I think you attended it and addressed it. And it was put to me the partner of your Chief of Staff works for that PR lobbying firm, Precision Public Affairs. Is there any conflict there? 

MARLES: No. So, I mean there's a couple of points to make. In terms of my Chief of Staff and his partner, all of those arrangements are appropriately declared and all conflicts of interest are appropriately managed. In terms of the event itself, this was the launching in this term of government of the Parliamentary Friends of AUKUS. It's a really important body. It was established in the last term of government and it really matters that we have a bipartisan meeting of MPs across the Parliament which support AUKUS. And that's because AUKUS is a multi‑decade project– 

CLENNELL: Sure, but why is the lobbying firm hosting the event?

MARLES: Which is going to be done across governments of both persuasions. 

CLENNELL: Why is the lobbying firm hosting this?

MARLES: You will see government affairs bodies such as Precision supporting events of this kind throughout the Parliament. So, I mean there's nothing unusual about that. But you know, this is a really important group. I was very proud to be a part of its launch in this term of government. I was there with the Chargé d'Affaires of the United States, the UK High Commissioner, my counterpart Angus Taylor, you know, as well as obviously the co‑chairs Aaron Violi and Matt Burnell. And the point I would really make is that if you take a step back and you look at AUKUS, since AUKUS was announced, there have been changes of government in the United Kingdom, the United States and Australia. And yet the project continues. And that's because it needs to be bipartisan. And bodies like this provide the ballast in respect of that. And we see similar bodies in the Congress, similar bodies in the UK Parliament, so that's what it was and it's totally appropriate that I should be part of that launch as the Defence Minister. And that there is a government affairs body which has provided support to that function, that is very normal in terms of the activities in Parliament House. And in respect of my Chief of Staff and his partner, all of those issues are appropriately declared and appropriately managed.

CLENNELL: Tell us about the Isaac Herzog visit. Will the PM and Penny Wong be meeting him? Will you be meeting him? What security preparations are in place for the visit? And do you have any concerns about unrest, even a terrorist incident?

MARLES: Well, there's a lot in all of that. I mean, he will be appropriately met and I will expect that all the people you just mentioned there will be meeting President Herzog. I mean, he's here obviously, as a guest of the Prime Minister and the Governor-General. All the security measures that are appropriate to any visiting dignitary in all the circumstances as they are assessed by our agencies will be put in place and that will be the case for President Herzog. I'm obviously not going to speculate about what sort of protest there might be, but there will be the appropriate security arrangements put around President Herzog's visit. But Andrew, I think the fundamental point to make here is that in visiting Australia, he will be a welcome and honoured guest. His visit is actually important on its own terms in terms of the bilateral relationship between Australia and Israel, but clearly in the aftermath of the Bondi massacre. This is a hugely significant visit for the nation, but particularly for Australia's Jewish community. And I know for them particularly the visit of the President of Israel, the equivalent of our Governor‑General, will be enormously significant in the aftermath of Bondi. And that's the context in which this visit is occurring and I think it will be a very important visit.

CLENNELL: Is it fair to say that while you invite President Herzog, you probably wouldn't invite Prime Minister Netanyahu at the moment?

MARLES: Well, I mean, I'm not going to walk down that path. The President of Israel–

CLENNELL: Is it a fair statement?

MARLES: Well, the President of Israel is exactly the right person to be coming here in the context of what has occurred at Bondi. To have the head of state of Israel will be enormously significant for Australia's Jewish community. And that's the reason why this visit is happening. It will be, on its own terms, a visit, as I said, which will be important in terms of our bilateral relationship with Israel. But fundamentally, to have the head of state come to Australia over the course of this coming week I think is going to be very significant for the country and for Australia's Jewish community. And that's the basis of this.

CLENNELL: Will he address Parliament?

MARLES: Look, there's not an address to Parliament, but he will– we will be meeting with President Herzog in all the normal ways and those meetings will be important.

CLENNELL: Richard Marles, thanks so much for your generous time this morning.

MARLES: Thanks, Andrew.

ENDS