Radio Interview, ABC Melbourne Mornings

SUBJECTS: Geelong Refinery Incident; Fuel Security; Defence Funding. 

WALEED ALY, HOST: Richard Marles is the Member for Corio. So, this is his local patch. He also happens to be the Deputy Prime Minister and the Defence Minister. So he's got a lot to talk about and he's with us now. Richard, hello.

RICHARD MARLES, DEPUTY PRIME MINISTER: Good morning, Waleed. How are you?

ALY: I'm very well. Let's start with your local patch. We've seen the numbers there, or we've heard the numbers from the Prime Minister. He's then said that production would ramp up from those bases of 80 per cent and 60 per cent. What seems to be missing, though, is a sense of timeline on this. Do you have more information on that? Like when will they ramp up and how fast?

MARLES: Look, I don't have more information on that. I mean, we were obviously at the refinery this morning and Scott Wyatt, the CEO of Viva, was speaking to exactly this issue and they were unable to put a time frame on it. Like, they need to go in when it's safe to properly assess that part of the refinery which has been damaged to then really work out those issues. But the point he was making is that the– and it gets into the detail here, but the particular component of the refinery which has been damaged, they can refine fuel without. So there's a workaround, in other words. And they're going to pursue that.

ALY: Sorry, can I clarify what that means? They've got other facilities where they can refine fuel?

MARLES: No, and as we get into the detail of this, you'll quickly get above my pay grade. But as I understand it, the particular units that were damaged in the fire, it is possible to refine fuel without those units being operating and that is the intention to pursue that path. And it's certainly not optimal, but it's possible. And in these circumstances, that's their plan and that's what enables them to say right now they will be able to continue 80 per cent of jet fuel and diesel production. And again, to just go into again, a bit more detail – the parts of the refinery that refine jet fuel and diesel were not damaged. They are scaling back that as a measure in the moment because of the general safety of the whole precinct. But in actual fact, the parts of the refinery that do jet fuel and diesel are unaffected by this. And so I would be hopeful that they'll be able to get that up and back to full production relatively quickly. And it is jet fuel and diesel which are the fuel types that are under most pressure well, across the country, actually, but here in Victoria as well, as a result of what's going on in the Middle East. The units that were damaged are part of the petrol refining process. But as I say, there is a work around that. At the moment, they will therefore be refining at 60 per cent, but again, they hope to get that up. There isn't a time frame on that. But they are confident that they will be able to replace petrol– a lack of petrol production with imports because there is more petrol available on the global market. And so all of that leads them to conclude that they're relatively optimistic that actually the impact on the overall supply of fuel to the state and to the country will be relatively minimal. 

But if I could, Waleed, just go to one of the callers that just came in before about the human side of this. I think there is something in that. And we are really grateful that there were no injuries as a result of this. It happened at 11:15 at night, as people are aware, and I think we're lucky for that because there were less people around. And it was a significant incident, there's no doubting that. I mean, in my lifetime – and I've been in and around that refinery literally the entirety of my life – this is one of the biggest things that has happened at the refinery over that period of time. There was a community meeting last night at the Hendy Street Hall in Corio. You know, actually I think Shell previously and now Viva, as two owners of the refinery over its lifetime, I personally think have done a really good job in terms of their community engagement. The refinery really in many ways defines the character of the Corio suburb. Corio was built up around the refinery when it was first built in the 1950s–

ALY: It's a real landmark. Anyone who drives there knows it. 

MARLES: Well, it's a total landmark. That red and white smokestack was always for me, as a kid growing up, when you could see that on the horizon you knew you were about to return home, driving back from Melbourne. And it was always something we looked out for. And I think there's been a sense of pride, I’ve certainly grown up with a sense of pride that this is the largest refinery in Australia. And I feel like over the last month we've really understood how important this particular facility is. So this is something that is definitely impacting the community. But actually, I think the community has a real sense of pride about the refinery. 

ALY: Well, just on the refinery, given you mentioned how long it's been there– 70 year old facility. I'm getting lots of texts– whenever we talk about this we get texts about maintenance, age, ideas that this was inevitable, this was always going to happen, suggestions that it had been– because of the fuel situation, it had been pushed to a capacity that it couldn't sustain. And so again, the idea then being that something like this was inevitably going to happen. Are you satisfied that none of those things are contributing factors here?

MARLES: I am and I can understand why those questions are being asked, but I am satisfied. So, a couple of things on that. Yeah, the refinery was built between 1951 and 1954. It opened in 1954. But really we should think about this as a living thing. I mean there’s been literally $150 million invested in it over the last couple of years. And so across the refinery there is the most modern of equipment. And in that sense it's not right to think of this as something that's 70 years old. It's actually a living entity which is constantly being maintained and upgraded. In terms of the specifics of the moment, it is right that the refinery is operating at maximum production given all that's going on with our fuel supplies. But I know that – and this was specifically addressed by Scott again this morning because this question was asked of him – I mean, they're very careful about how they're managing their maintenance. They have scheduled maintenance ongoing. Safety is paramount in terms of how they operate. And yeah, they are operating as much as they can right now, as they should be–

ALY: So, isn't that a false economy then? Because if they operate at that capacity, that increases the risk and then you have a fuel drop because suddenly you can't produce the fuel you used to.

MARLES: Well, I don't accept everything that you've just said then in terms of– I mean, there's a maximum that you can safely operate at and that's what they're doing and I don’t intend to– 

ALY: And you think it's unrelated to what's happened here? The fact that we're operating in that category has no connection? 

MARLES: I do. And again, all of this was being asked of the company really forensically, as you would expect and that is very much the perspective that they have. And we went through in detail what their maintenance schedules are and where this particular fire broke out. Look, refineries, by their nature, are dangerous places. They're major hazardous facilities. They need a licence in respect of that. And there have been incidents throughout my life there, and this is a significant one. But it was contained really quickly. As I say, no one was injured and we're grateful for that.

ALY: There's no doubt it could have been worse, I think we understand that. It's 21 minutes past nine. That's the voice of Richard Marles, by the way – MP for Corio, Deputy Prime Minister, also Defence Minister. I need to talk about defence, but obviously we're running short on time and it's a complicated area but just before I get there, the national fuel security plan, we're at stage two of four. Four is like proper rationing. How close are we, if we are close at all, to moving up a stage?

MARLES: I think one of the things I'd want to say is that what's happened in Geelong, I don't think, gives rise to a move between stages. And that's where we're obviously monitoring the situation. But what's really driving events here is what's happening in the Middle East. I mean, that's fundamentally the determinant here and I think that's much more significant than anything that's happened in Geelong in the last 48 hours. I mean, we will obviously continue to monitor this. We remain at stage two at the moment. Hopefully, that's where we stay. But we don't know how things are going to play out in the Middle East, and that's why we have stage three and stage four ready to go and if we're at a point where we need to move, we will.

ALY: Let's talk defence spending. [You] gave a big speech yesterday. I would characterise the commentators as splitting into two camps. One says this increased defence spending is welcome, but has been too long coming. That's camp one. The other camp says there's less to this defence spending than meets the eye because of a change in the way it's all being calculated, and actually there's no new spending here that hasn't, kind of, already been foreshadowed. Which of those two camps is right?

MARLES: Well, there's massive new spending and you'll have people with various agendas who speak about this. But firstly, there's no new way in which this is being accounted for. In the budget, we account for defence spending by looking at the dollars which are being spent on it. And what we announced yesterday was an increase of $14 billion over the forward estimates, $53 billion – this is additional defence spending – over the decade. And what that means is that since coming to government, we've increased defence spending by $30 billion over the forward estimates and $117 billion over the decade. Now they're big numbers. What do they mean? To put them into some kind of context, over the entirety of the Abbott-Turnbull-Morrison government, they increased or injected about $10 billion over a 10 year period of additional defence spending into the defence budget. Which is to say, we've done 12 times as much in terms of increasing the defence budget in four years–

ALY: The argument over the accounting is about what counts as defence spending– 

MARLES: No, no. But it’s not about–

ALY: So it's the inclusion of things like pensions and so on as part of the defence spending.

MARLES: Sure, but Waleed, to be completely clear, none of that has changed in terms of how the budget is reported. And this needs to be properly understood. And if I can just finish, if we're to compare apples with apples, we've done 12 times as much in terms of increasing defence spending in four years as what the Liberals did over a period of nine. And that is absolutely comparing apples with apples. Exactly the same type of expenditure. What you're referring to is the number that is used as a percentage of GDP. 

ALY: Yes.

MARLES: We use that number for an international comparison because that is the NATO number. So, if you want to – again, apples with apples – compare us with countries in NATO or countries within Indo‑Pacific, we use the NATO measure and that's all that we've done here. And when you do that, what you find is that on this day we are spending more on defence than the UK, Germany, France, Italy, Canada – most NATO countries. We're spending more on defence than our comparable likeminded countries in the Indo‑Pacific. And so actually we have a good story to tell there. And so that's an important thing to understand as well. But actually what we really focus on is the dollars, the absolute dollar number that we're putting into defence. None of that has changed and it is a major injection into defence. This is the biggest peacetime increase in defence spending in our country's history and whichever way you cut it, that is the fact.

ALY: Richard Marles, thank you, I better move on. Appreciate your time. 

MARLES: Thanks, Waleed.

ENDS