Radio Interview, FiveAA Breakfast

SUBJECTS: Deep Maintenance and Modification Facility; Federal Budget; AUKUS

DAVID PENBERTHY, HOST: Deputy Prime Minister and Defence Minister Richard Marles in town today, and we've got him on the line now. Deputy PM, Defence Minister, good morning, and thanks for your time.

RICHARD MARLES, DEPUTY PRIME MINISTER: Pleasure.

PENBERTHY: You're here for a couple of reasons today. And look, you'll be thrilled to hear we're actually going to set the federal budget to one side. We went through the entrails of that with the PM two days ago, so we won't subject you to a grilling. Excellent, indeed. But so, the two key things: obviously, you're going to be the keynote speaker at The Advertiser's Defending Australia event, which is a great thing about the security and economic future of the nation and indeed our state. But also, tell us about this new military aircraft facility, that it's worth a stack of money. You're opening it with the Premier at the RAAF base today.

MARLES: Yeah. So we'll be doing this later this morning at RAAF Base Edinburgh. It's a $200 million facility. It's essentially a series of large hangars, but what it enables, and obviously equipment inside, but what it enables is deep maintenance of our P8 fleet. So they are maritime surveillance aircraft, but the airframe is based on a 737, a Boeing 737. And what has happened previously is that those aircraft have had that maintenance done overseas. This is going to mean that that will be able to be done at the RAAF base. It's about 80 jobs as a result, ongoing jobs. In terms of maintenance of the planes, this means—well, it's work that will happen in Adelaide, but it's also really important sovereign capability. And it means that we're able to get our planes maintained more easily, but, you know, being ready more of the time as a result, and much less time having to transit them overseas to be maintained.

WILL GOODINGS, HOST: We want to break one of our promises, Minister, because I want to talk about something that's in the budget that falls in your remit already. Yeah, sorry. This is entrapment. Sorry about that. We didn't discuss this beforehand.

MARLES: I think that is one of my red lines.

PENBERTHY: You're in the running for the meat tray.

MARLES: Although, can I say, I hate getting the newspapers in the morning when the pages are skew-whiff as well. I always pick the newspaper from the middle of the pile so that you're probably nice and not creased.

PENBERTHY: You probably had to get all the papers on Wednesday.

GOODINGS: Did we see in the budget a little bit of a part of the risk around AUKUS that we haven't really focused on to this point? And by that, I mean, so much has been with regard to the willingness of the parties, their capacity for us—the US—to transfer Virginia-class submarines to us, given how many they build, what's happening in the UK, and so forth, when in reality there's one issue that's much closer to home, and that's a potential cost blowout in a massive, massive project, the likes of which we've never undertaken. Because if we, like, just take one small component of it, for example, the Australian Submarine Agency already, over the forward estimates, there's been a huge upward revision from where this was at your last budget. Are we seeing the beginning of a massive cost blowout of AUKUS?

MARLES: No, we're not. But there is—you're right that there is an increase in cost, but that was an expected increase in cost. The way to think about this is that—I mean, this is obviously a program which will happen over a very long period of time, over decades, and we have a sense of what the costs are going to be over that period of time. The budget is a forecast of four years ahead, and in fact, in the context of defence, it's really 10 years ahead. And if you think about the 10-year segment of work that is now going to happen from now, 2026 through 2036, it ends up being kind of a meatier part of the process. So, in those 10 years, we are seeing much more construction of the facility in Adelaide. So that's an expensive part of the process. In the next 10 years, we will actually see the build of the first submarine begin, and again, that's an expensive process. So what that increase in spending reflects is the fact that we are moving into a phase of this whole program which is just more expensive, but very much anticipated. So if you take a step back, what we always felt—the way to think about this—is that, over the life of this submarine capability, it costs about 0.15% of GDP. That's really—I mean, given we seek to do this on an ongoing basis, that's the amount that we are looking to commit to AUKUS, and we're very much within that envelope. So it's not a—it is more expensive going forward, and there'll be points in the future where that expense comes down. But this is an expensive part, phase, of the development of the submarines. Obviously, with that comes a whole lot of opportunity. I mean, the building of the construction yard at Osborne is going to involve a lot of people. And ultimately, the ramp-up of employment at Osborne, which will be part of the building of the submarine itself, involves a whole lot of employment. When it's all said and done, Osborne is going to be the biggest industrial workplace in the country. There'll be 7,000 people there. Between building the frigates and the submarines, and the maintenance of our existing Collins-class submarines, it'll be a huge facility.

PENBERTHY: On the topic of forecasting, US defence is still only forecasting the construction of 1.7 Virginia-class subs per year. They can't transfer any to us if they're not making two. When the Japanese Prime Minister was in town recently, did you sound out the Japanese with regard to contingencies for what would be a capability gap if we can't get our hands on something that works right now while waiting for the first AUKUS sub to roll off the line?

MARLES: No, we didn't have that conversation. We're very committed to this program, and I know that there are others around who are desperate to talk about Plan Bs, but the simple fact of the matter here is talking about Plan Bs is actually talking about not doing it. I mean, if you chop and change the whole submarine program, given that it takes decades to build them, then really you're making a decision not to build them. And that's what we saw with the Coalition when they were last in government. They kind of chopped and changed with Japan and then with France. And you've actually got to stick to a program. In terms of the US industrial base, it’s on track. You know, what we need to see is the production rate of submarines. By the time we get to the early 2030s, coming off the production line in the US at two, and I think in some years you'll see three. When you look at the production schedule of Electric Boat, they're actually on target to achieve that. We are doing much more in terms of the sustainment of U.S. Virginia-class submarines for the U.S. Navy—existing submarines, getting them out to sea quicker. So, in fact, US submarine sea days are really improving, and we're making a contribution to that, both through finances and people. And so we're actually really confident that the conditions will be met in the early 2030s for the transfer of the Virginias to Australia.

PENBERTHY: Just finally, Richard Marles, to wrap it up. Does this country need to have a more thoughtful conversation about immigration? I know we've got the sort of, you know, almost Cronulla riots-inspired “F‑off, we’re full” sloganeering going on at the moment, but you just mentioned the biggest workforce in Australia, 7,000 people at Osborne. All of them have to be Australian citizens under the terms of the AUKUS deal, don't they? So, when it's really chugging along and it hits that peak employment rate, all of those people—Aussies—who's going to build the houses in their absence?

MARLES: Well, I think it's a really good question, and detail matters here, and that's a really good example of it. I mean, there are skilled migrants that come into the country who do build houses, but they're involved in a whole lot of other parts of the economy—the care economy, for example. And it's a really good question. If you are, without thinking it through and without being considerate to the details, if you close the door, you can do a lot of harm to our economy. Now, we get migration needs to be managed. In fact, since the peak when we came to government, migration has come down by 40%. So, we've been managing the migration rate down since we've come to government. But you do need to do this carefully because it's really important that we have the skills in this country to make sure that we continue with our economic growth and that we keep moving forward. And the example that you've just given is a really good one. But basically, both in WA and in South Australia, where you're going to have two very large work sites which have to be Australian citizens in terms of the security requirements, it's going to draw a lot out of the local labour force, and it is going to be important that there are people around to do those other jobs which are not being done, because people are now—you know, you've got those 7,000 people working at Osborne.

GOODINGS: Yeah, absolutely. Great chatting to you, Defence Minister, Mr Richard Marles, and enjoy your day here in SA. Thank you.

MARLES: Look forward to it. See you.

ENDS